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Wider range of government backed programmes to get the nod - 08/07/2008

Neelie Kroes and her predecessor Mario Monti at a conference

EU governments planning to give public money to businesses no longer have to notify the commission – if the scheme is likely to boost growth.

The commission has simplified EU rules for granting public aid to programmes that clearly create jobs and stimulate economic activity, especially those targeting small and medium businesses.

Under a new “general block exemption”, many projects do not need to be reported to the commission. Previously, the commission vetted these types of state support from EU countries, to ensure they did not confer an unfair competitive advantage.

"These new rules set out a clear framework to allow member states to grant aid targeted at creating jobs, boosting competitiveness and improving the environment without the commission having to get involved," said competition commissioner Neelie Kroes. 

The categories of support that now qualify for automatic approval have nearly tripled – to 26. New categories include programmes that protect the environment, improve energy efficiency and foster innovation. Risk capital and support for women in business are also exempted for the first time.

The new rules focus particularly on making it easier for smaller companies to receive state funds by allowing up to €7.5m in investment aid for a given project. The idea is that certain categories of government support are clearly in line with EU goals and should automatically get approval.

The reason the commission checks proposals for state support is to guard against protectionism and encourage fair competition – for a healthy economy. But the process can be costly and time-consuming, so the EU is implementing a number of simplifying measures as a part its growth and jobs strategy.

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