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The nub of the problem is that the actual amount of divergence doesn't matter that much. In state aid the rules could be exactly the same and different authorities could come to different opinions on an issue because discretion plays such a big role in the system 1/ https://twitter.com/pmdfoster/status/1273868177064308736
That's what makes state aid complex. The rules can be clear but the flexibility in how they are interpreted is massive. Then if you imagine a UK and an EU authority having fundamentally different interests and perspectives it becomes even harder... 2/
One of the tests the Commission applies is whether a state aid measure is in the "common European interest" and therefore permissible. The UK's interests are not going to be included in that. Similarly a UK body would have a similar test - how could it include EU's interest? 3/
The UK cannot allow a foreign power to have such discretion over whether public spending measures are permissible. Particularly when it is no longer part of the club. But the middle ground is not easy either. If there are cases where interests collide what happens? 4/
The UK would not be required to actually materially diverge to start giving aid that harmed the EU' interest. It could use the flexibility inherent in the system. Equally, what if the EU does the same? Under the middle ground the UK has no recourse if it can't impose tariffs 5/
Ultimately, it comes down to the fact that the rules don't prohibit that much. The UK is not going to subsidise massively not because of some rules but because despite the government's rhetoric, it doesn't see the value in it. Especially in comparison to most EU member states. 6/
The risk on state aid is more on the UK - it doesn't have the same firepower as the EU - Germany alone has completely blown everyone else out of the water when it comes to COVID state aid. Is it worth junking the future relationship over an issue that is not actually that big? 7/
The last point worth mentioning is that the EU already has some insurance in the form of NI Protocol. For really big measures, they could be caught by the Protocol anyway. So the EU need not go for the maximalist demands because it already has some protection. ends/
