State aid scoreboard shows reorientation of support towards R&D and SMEs
The European Commission has published an updated scoreboard on state aid, showing a trend towards a reduction in state aid levels and redirection towards horizontal schemes such as research and development (R&D) and the development of small and medium sized enterprises (SMEs). The state aid scoreboard seeks to increase transparency and raise awareness of the need to control state aid, which amounted to 82 billion euro in the EU in 2000. The 2001 Stockholm Council underlined the need for a reduction in global aid levels and for the reorientation of aid towards horizontal objectives of Community interest that tend to target market failures. These objectives were confirmed at the 2002 Barcelona Council. In addition to R&D and the development of SMEs, they include environment and training. 'Member States need to further reduce their aid levels and continue the process of redirecting aid to areas of common interest such as the environment, employment, R&D and small and medium sized enterprises,' said EU Competition Commissioner Mario Monti. 'Their action should be aimed at reviewing national aid policies, assessing whether the grant of state aid is always the most appropriate instrument to correct certain market failures and evaluating the effectiveness of the aid that is awarded,' he added. The share of EU aid granted to horizontal objectives increased by more than 13 percentage points from the period of 1996 to 1998 to the period 1998 to 2000. This trend was observed to varying degrees in all Member States with the exception of Austria, where the share decreased slightly from a relatively high level. State aid to SMEs is justified according to the Commission as they tend to find it more difficult to gain access to external sources of finance and to information, and are particularly vulnerable to heavy administrative burdens and regulatory changes. In the scoreboard report, the Commission does however question whether state aid is the most effective way in which to support SMEs. 'In general, policymakers ought to assess, on a case-by-case basis, whether existing market imperfections affecting SMEs would be better addressed through the provision of state aid, advisory and information services, the intensification of structural reforms, or a combination of these measures. Further research is needed to assess the impact and measure the effectiveness of aid to SMEs vis-à-vis other policy instruments,' states the state aid scoreboard.