Brussels, 12/04/2000 (Agence Europe) - The new European Commission survey on State aid in EU countries confirms, with detailed statistical data, what European Commissioners responsible for the issue (Karel Van Miert previously, now Mario Monti) have often said: levels of aid are still too high. The effect is threefold negative: competition is distorted, inefficient production structures are kept alive artificially, at time considerable public resources are wasted whereas they could be necessary in dynamic sectors and those of the future.
The new survey covers the years 1996, 1997 and 1998. It notes a substantial decrease in the annual average volume of aid, which stood at 104.2 billion euro in the previous three-year period and has fallen to 93 billion. The analyses focuses especially on aid to the manufacturing sector. Here are the main elements, according to a note from the spokesman's services:
Aid to the manufacturing industry
Whilst the 33 billion euro spent for this sector are less than in the preceding period from 1994 to 1996, the overall decrease is not EU wide and depends upon only a small number of countries, in particular Germany and Italy where aid amounts fell substantially. Also in Belgium, Spain and Portugal levels of aid to manufacturing are now lower. In all other Member States, the levels of aid are increasing.
Substantial differences between individual Member States remain. Aid levels in relation to value added are highest in Greece and Italy and lowest in the United Kingdom and Sweden. A comparison shows that in Italy aid as a percentage of value added is six times higher than in the UK and over twice as high as in France. The differences however seem appears to be growing smaller: Member States like Sweden, the Netherlands or the UK with relatively low aid volumes have continued to increase them whereas countries like Italy and Germany are reducing their relatively high aid levels. A comparison of aid in terms of euro per person employed shows that Italy ranks first, followed by Luxembourg and Ireland. The lowest aid per employee is granted in Sweden and in the United Kingdom. In the three new Member States aid levels are all far below the Community average but with a rising tendency.
The share of aid to manufacturing in the Community given in the four cohesion countries Greece, Ireland, Spain and Portugal - has now increased from slightly under 8 percent to more than 9 percent. At the same time, the share of the four large economies has dropped from around 84 percent during the previous period to 80 percent now (Germany, France, United Kingdom, Italy).
This is a reassuring development because the disparities in aid spending between the richer and the less prosperous Member States conflict with the objective of social and economic cohesion.
Development of overall aid
The fifteen Member States spent on average 93 billion euro per year for state aid purposes during the period 1996 - 1998. The decrease in comparison with the 104 billion euro during the previous reporting period is a result of substantial reductions in aid to manufacturing and transport and smaller reductions in aid to agriculture, fisheries, coal and tourism.
The Survey also reveals that, with 7 percent of overall aid, Member States still grant considerable amounts of aid on an ad-hoc basis, i.e. award it to specific companies outside horizontal, regional or sectorial aid schemes. Such ad-hoc aid is mainly aid for the purpose of rescuing or restructuring ailing companies. Because of the particularly distortive effects on competition, these aids are very strictly controlled.
Future guidelines. In the long-term, the Commission's goal is to reduce bureaucracy, increase aid transparency, and speed up the recovery of aid paid out unduly, declared the Commissioner for competition, Mario Monti, when presenting the report to the press. To enable his services to focus on the more serious cases, the Commission has already begun the simplification of procedures and set out the rules of exemption. The revision of the rules for aid to SMEs, to training and de minimus aid is underway (see EUROPE of 5 April, p.13), as well as for the rules for aid to the environment and employment. Regarding transparency, a "scoreboard" or register of aid is being studied, and Mario Monti hopes that transparency will prevent illicit aid, "like guarantees to the public sector". Recovery has to be speeded-up and "governments have only themselves to blame" if they have to recover aid from companies that they themselves paid out without waiting for the Commission's opinion, the Commissioner commented turning to the case of WestLB (see next article).