Business and free market groups slammed pledges today by Boris Johnson to expand state aid for businesses if the Conservative Party win the upcoming election.
In a press conference today, Johnson promised to expand Britain’s state aid regime once the UK leaves the EU.
“We will back British businesses by introducing a new state aid regime which makes it faster and easier for the government to intervene to protect jobs when an industry is in trouble,” a briefing document said.
Head of regulatory affairs at the Institute of Economic Affairs (IEA) Victoria Hewson said support for state aid was “veiled support for cronyism.”
“For all the lip service the Conservatives pay to free markets and free enterprise, today’s announcements about state aid call into question their basic understanding of how these systems work,” she said.
“Calls to expand state aid translate to veiled support for cronyism. Interventionist and protectionist policies always end up disadvantaging smaller businesses in favour of a few giants.”
A spokesperson for the Institute of Directors said: “It’s not clear how these proposals will fit with ambitions of a ‘Global Britain’. The Conservatives must be wary of opening a can of worms on state aid, it’s important to have consistent rules in place to resist the impulse of unwarranted protectionism.”
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Johnson also promised to introduce a buy British rule for public procurement.
This follows controversy over the awarding of government contracts to overseas companies. One notable example was UK bank note-maker De La Rue losing out on the contract to print the UK’s new blue passports to French-Dutch firm Gemalto last year.
“We will back British farmers by making sure we leave the CAP (Common Agricultural Policy) and will promote a ‘buy British’ rule for public bodies,” Johnson said.
IEA economics fellow Julian Jessop said: “A ‘Buy British’ policy is pure protectionism, and it comes with heavy costs.
“The Conservatives are showing little understanding of the benefits of free trade, let alone the benefits of Brexit. A ‘buy British’ policy would make it harder for the public sector to access the best products at the best price, wherever they happen to be made.
“As a result, consumers or taxpayers will pay more for a lower quality service. Everyone will suffer if there is less choice and less competition.”