2. Overall assistance

5. Assistance granted at the EU level is mostly for agriculture and "structural actions" (Chapter IV(1)). The EU's structural actions, which comprise the structural funds and the Cohesion Fund, seek to "strengthen the economic and social cohesion [of the EU], in particular by reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions".¹⁸⁹ According to the Commission, only a fraction of Cohesion policy funding is covered by state aid rules, as the majority of spending relates to general infrastructure or non-economic activities. In addition, the Commission indicates that the respect of state aid rules is an explicit requirement for benefitting from the structural funds.

6. According to the latest EU subsidies notification, outlays under the European Regional Development Fund, Cohesion Fund, and the Instrument for Pre-accession Assistance totalled close to €37 billion in 2008, the latest year available, compared with around €29 billion in 2006. The EU notification did not specify the allocation of these funds by member State or sector. The European Regional Development Fund accounts for approximately 80% of this assistance: as one of the structural funds, it is mainly used to co-finance investment for the creation or maintenance of jobs, infrastructure, and the development of local business initiatives and the activities of small and medium-sized enterprises.

7. The remainder of this section provides an overview of assistance granted by member States during the period under review, as measured by state aid data published by the European Commission. Given that assistance sometimes takes the form of regulatory or general measures that do not entail state aid, these data do not cover all assistance granted by member States; in particular, they do not reflect the total size of fiscal stimulus packages adopted by some member States during the economic crisis, and therefore underestimate assistance provided by member States during the period under review. For example, certain types of labour market support granted directly to workers under some of these stimulus packages may not be subject to state aid control by the Commission, and is therefore not included in the data presented in this section of the Report. Similarly, demand support measures, like car-scrapping schemes, to the extent that they do not discriminate with regard to the origin of the product, are not counted as state aid.

8. State aid provided by member States totalled approximately €427 billion in 2009, or 3.6% of EU-27 GDP.¹⁹⁰ On average, member States granted approximately €268 billion per year between 2007 and 2009, roughly three-and-a-half times the average for 2004-06. This reflects the sharp increase in state aid provided by member States in response to the financial and economic crisis (Chart III.1).

9. The United Kingdom granted the largest amount of state aid in 2009 (€124 billion), followed by Germany (€116.8 billion), France (€42.3 billion), Belgium (€34.3 billion), and Greece (€14.3 billion). Relative to economic size, state aid was highest in Belgium (10.2% of national GDP), followed by the United Kingdom (7.9%), Ireland (7.7%), Greece (6%), and Latvia (5.8%). For seven member States, the share of state aid in national GDP was less than 1%.

10. Excluding aid granted in response to the financial and economic crisis, average annual state aid decreased from €76.1 billion in 2004-06 to €70.1 billion in 2007-09. Twelve member States reduced their average state aid levels between 2004-06 and 2007-09. Relative to economic size, Bulgaria recorded the highest level of non-crisis aid in the EU (2.1% of national GDP) in 2009, followed by Malta (2%), Hungary (1.5%), and Finland (1.2%). Non-crisis state aid was 0.4% of national GDP or less in Estonia, Luxembourg, Italy, Netherlands, and the United Kingdom.

11. The bulk of non-crisis state aid provided by member States was directed at manufacturing, followed by agriculture. The share of manufacturing in total state aid increased significantly between 2004-06 and 2007-09, while the share of transport decreased. Other sectors' shares remained relatively stable (Chart III.2).

12. Excluding crisis-related measures, grants and tax exemptions were the most common instruments for provision of state aid, accounting for approximately 93% of the total in 2009.¹⁹¹ Soft loans, guarantees, and equity participation accounted for slightly less than 7% of total aid. Austria, Bulgaria, Cyprus, Denmark, Luxembourg, and Slovenia used grants for the bulk of state aid. France, Germany, Ireland, Malta, Portugal, Slovakia, Sweden, and the United Kingdom used tax exemptions for at least 50% of state aid. Including aid in response to the financial and economic crisis, around half of total state aid in 2009 was in the form of equity participation, followed by guarantees (36% of total aid), and grants (10%).