Protocol state aid rules ‘mean lasting damage to NI economy’

The EU’s continuing control over state aid due to the NI Protocol will inflict lasting damage on Northern Ireland’s economy, the DUP has warned.

By Henry McDonald
Friday, 20th May 2022, 7:52 am
Updated Friday, 20th May 2022, 7:54 am

Upper Bann MLA Diane Dodds pointed out that Brussels imposed new caps on governments financial support for local businesses and communities which will last over the next five years.

Mrs Dodds said it was “striking” that the EU was imposing fresh restrictions on state aid while Foreign Secretary Liz Truss was outlining how the protocol was preventing government from cutting VAT or injecting financial help for Northern Ireland.

“These rules have the potential to limit the level of support that can be provided to local firms if it ‘affects’ trade with the EU. Crucially, businesses and key projects in Great Britain would not face these restrictions. This would place Northern Ireland at a competitive disadvantage and risks further distorting our place in the UK internal market.”

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Protocol rules 'mean lating damage to NI economy'

She said this was another example of how the EU has “consistently used the Northern Ireland Protocol to undermine the constitutional and economic integrity of the United Kingdom”.

The DUP MLA continued: “It is entirely undemocratic that we are now subject to the whim and authority of Brussels on something so fundamental to the success of our economy without as much as a single member of Parliament or the Assembly having a say. For as long as Northern Ireland is tied to a state aid system that is focused on levelling-up North-South rather than East-West, our constitutional position will continue to be eroded.

“Too often in recent weeks the spirit of co-operation and positive words uttered by government ministers have been met only with provocation by the EU. That situation cannot go on. It is time for decisive action that protects our interests and restores Northern Ireland’s place in the United Kingdom internal market.”

Mrs Dodds was referring to a decision taken by the European Commission on Tuesday that approved Northern Ireland would received regional EU aid between this year and 2027.

The decision was made under EU state aid rules in line with the protocol which also limits the amount of additional financial support and measures that the UK can give to the Province.

Under the protocol EU rules on state aid and fiscal support packages by governments have had a tangible impact this year on the Province’s economy.

In March it emerged that Northern Ireland would miss out on a £47 million VAT cut on the installation in homes of energy saving measures such as solar panels, insulation and heat pumps.

The VAT cut did not apply to the Province because due to the protocol Northern Ireland is still subject to EU rules that insist there has to be a minimum of 5% VAT across Europe’s member states and regions.

Meanwhile, an independent member of the House of Lords has warned that peers may reject Liz Truss’ bill to empower the government to override aspects of the protocol.

Lord Kerry of Kinlochard has warned that the House would try to block the bill because many like him believe it would breach international law.

“I think this House still champions the rule of law. I think we showed that over the Internal Markets Bill. I think, if we have to, we will show it again in connection with a Brexit bill,” he told the Lords.