|Why the Government cannot just simply ‘Do Something’ about UK Steel Plants|
EU State Aid rules allow fostering the long-term competitiveness & efficiency of steel manufacturing, but not supporting manufacturers in difficulties. In particular, EU state aid rules allow support to steelmakers to make them more competitive in the long-term for objectives such as research, development & innovation. The EC has under EU state aid rules approved national measures in several EU countries to compensate energy-intensive businesses, including steel companies, for their high energy costs, most recently as regards the UK in December last year.
However, in view of the chronic over-capacity of the steel sector, EU Member States and the EC have already since the 1990s agreed to prohibit rescue & restructuring aid to steelmakers in difficulty. As past experience has shown, this type of aid distorts competition and risks leading to harmful subsidy races between Member States. It also doesn't help in the long run.