Brexit: State Aid & Public Procurement

Could Brexit mean that the UK will have greater freedom to offer subsidies to the private sector and to streamline public tender processes? Possibly – but perhaps not as much freedom as some have suggested.

State Aid

In theory, the UK will have greater freedom to provide subsidies or other forms of state aid to UK businesses after Brexit - but the ability of the UK government and businesses to complain about state aid in rEU Member States will be diminished.

In practice, the UK's freedom for manoeuvre on state aid may be limited by its international obligations, notably under existing WTO Treaties (which it is likely to want to remain party to) and possibly also under the terms of any deal with the EU on Brexit (for example, Switzerland's agreement with the EU contains obligations relating to state aid). In the longer term, concerns have been raised that the UK's departure from the EU could result in a loosening of EU state aid policy, allowing EU member states to offer more subsidies to the private sector in future. This could leave UK firms exposed to unfair competition from EU rivals.

Key issues to consider

Do you or any key customers/suppliers/trading parties benefit from any funding or other advantages from the EU itself or from other sources where the advantage is conditional on the UK's EU membership? If so, consider whether loss of that advantage may adversely impact your business.

Public Procurement

In our view, the UK will be likely to retain some rules on tendering of contracts between the public sector and business - but could be free to adopt a more flexible approach and could also in theory choose to discriminate in favour of UK suppliers. However, UK businesses will lose the rights they currently enjoy when tendering for public contracts in EU Member States (e.g. to complain about discrimination, unequal treatment etc).

In practice, the UK's freedom for manoeuvre on procurement may be limited by its international obligations, notably under existing WTO Treaties (which it is likely to want to remain party to, and/or to rejoin in its own right) and possibly also under the terms of any deal with the EU on Brexit (for example, Switzerland's agreement with the EU contains obligations relating to procurement).

Key issues to consider

Does your business tender for public contracts outside the UK? If so, consider whether you could lose access to key markets as a result not only of Brexit but also of potential problems/delays in the UK becoming a party in its own right to the WTO General Procurement Agreement.

Read Stephen Whitfield Profile