The visible hand – Europe’s habit of propping up firms may outlast the pandemic | Europe

The visible hand – Europe’s habit of propping up firms may outlast the pandemic | Europe

May 28th 2020Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our

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Editor’s note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more stories and our pandemic tracker, see our coronavirus hub

IT NORMALLY TAKES the European Commission about six months to review an EU member state’s request to derogate from the rules against subsidising domestic industry. Not these days. Since the outbreak of covid-19 roiled economies everywhere, requests to circumvent “state-aid” rules are often approved in under 24 hours, even on weekends. A trickle of demands from all over the bloc has turned into a flood. Nearly 200 subsidy schemes and bail-outs worth over €2trn ($2.2trn), equivalent to Italy’s GDP, have been cleared by eurocrats.

The single market at the heart of the European economy is built partly on the premise that national governments do not unduly aid “their” firms. Policies preventing them from doing so date back to the very first flushes of European integration. Now Europe finds itself in uncharted policy territory. Never have the rules been loosened to the extent they have been today. Politicians are brokering aid packages to industry in a way no one in living memory has been allowed to do.

Trouble is: they might get used to it. Even before the crisis, Europe was moving in a dirigiste direction. Now a breach has opened in a set of rules that had curtailed politicians’…



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