Ian King, business presenter

One of the tenets of the European Union is that state aid is prohibited. Dating back to the 1957 Treaty of Rome, which created the European Economic Community (EEC), any state intervention distorting competition or the free market is illegal.

It is a key reason why the British left-wing has historically opposed UK membership of the EU.

Jeremy Corbyn, who voted to leave the old EEC back in 1975 and who opposed the Maastricht and Lisbon treaties that respectively extended and codified European integration, has always wanted British governments to be free to nationalise or provide financial support to key industries as they wish.

Image: Some in the EU may now be thinking along similar lines to Mr Corbyn

This long-standing position explains why he has spent the past two years skirting around whether Labour would seek to remain in the EU's single market - which, as the EU has frequently said, would require signing up to its rules on state aid.


Yet some in the EU may now be thinking along similar lines to Mr Corbyn.

As was noted here two weeks ago, a number of politicians want the EU's strict competition rules relaxed, allowing the creation of European champions to compete globally with American and Chinese companies.

Image: The proposed Alstom-Siemens merger would have created the world's second-biggest train maker

A key test case has been the proposed merger of the French industrial giant Alstom with the rail arm of Germany's Siemens.

The deal, backed by both French President Emmanuel Macron and German Chancellor Angela Merkel, would have created the world's second-biggest train maker after the state-owned Chinese company CRRC but was blocked by Brussels on Wednesday on competition grounds.

However, even if France and Germany fail to get the EU's competition rules changed, both are likely to promote their big businesses through other means.

A hint as to how things may evolve came this week from Peter Altmaier, Germany's economy minister, hardly an ideological soulmate for Mr Corbyn.

Unveiling a policy paper called National Industry Strategy 2030, Mr Altmaier urged the creation of a state-owned investment fund to build stakes in strategic companies and prevent them being taken over by foreign competitors.

Image: Mr Altmaier says he is not proposing full-blown nationalisation but 'temporary stakes' in firms

Highlighting the industrial giants BASF, Siemens and ThyssenKrupp, Deutsche Bank and Germany's three big carmakers - Daimler, Volkswagen and BMW - as examples, Mr Altmaier stressed he was not talking about full-blown nationalisation, but "the state taking temporary stakes in companies... to prevent key technologies being sold off and leaving the country".

In fact, Germany has already taken steps to prevent foreign takeovers of companies in critical industries.

Last July, the state-owned bank KfW took a 20% stake in 50Hertz, a power network operator, to prevent it being bought by the Chinese. A month later, Berlin blocked the Chinese takeover of Leifeld Metal Spinning, a machine tools business that supplies the aerospace industry.

But what Mr Altmaier is proposing would be an even bigger departure from Germany's post-war industrial policy.

It is deeply worrying that instead he [Mr Altmaier] wants Germany, traditionally a very open economy, to imitate Mr Trump's protectionist antics. If Germany does go down this path it will be bad for global trade and, by extension, global prosperity

The key paragraph in his document reads: "If key technological competencies and, as a result, our position in the global economy were to be lost, this would have dramatic consequences for our way of life, for the capacity of the state to act and for its ability to shape almost all policy areas. And at some point also for the democratic legitimacy of its institutions."

This is astonishing stuff from someone at the top of Germany's government and he has been heavily criticised.

Bernhard Mattes, president of the VDA, the industry body for Germany's carmakers, said: "The state is not the better entrepreneur."

Lars Feld, one of the five members of the influential German Council of Economic Experts, said: "One can't give companies virtual guarantees of existence, the state should not go that far."

And Eric Schweitzer, president of the Association of German Chambers of Industry and Commerce, said: "I am sceptical when the state sees itself more and more in the role of an investment leader."

Image: Bernhard Mattes says the state 'is not the better entrepreneur'

What is even more astonishing about Mr Altmaier's National Industry Strategy is its unlikely inspiration. It cites both Donald Trump's attempt to bolster manufacturing in the US, under the slogan "America First", as well as China's "Made in China 2025" drive to move from making cheap goods to higher-value products and services.

Mr Altmaier said Germany could no longer "passively watch" what was going on in the US or China.

He added: "If individual countries or companies try to take the lead and expand their market positions, we also have the right and a duty to defend ourselves."

Those comments may reflect frustration that Germany, a key supplier of machine tools to China's manufacturers, has been caught in the crossfire during the trade dispute between the US and China - a reason why Germany's economy is currently flat-lining.

Image: Mr Altmaier wants to create a state-owned investment fund as part of his strategy

They're also wrong-headed. The likes of BASF, Volkswagen and BMW are already world leaders. They need no help from the German government.

Most wrong-headed of all is the inclusion in Mr Altmaier's list of Deutsche Bank. The reckless risk-taking that precipitated the financial crisis was in part caused by executives at banks like Deutsche convincing themselves taxpayers would stand behind them if they failed.

Moreover, if these huge companies conclude they will be feather-bedded by Berlin, it will probably make them less, not more, competitive.

Germany's economic success was built on innovation, heavy investment in research and development and free and competitive markets. Mr Altmaier should be seeking to promote those things.

It is deeply worrying that instead he wants Germany, traditionally a very open economy, to imitate Mr Trump's protectionist antics. If Germany does go down this path it will be bad for global trade and, by extension, global prosperity.

Sky Views is a series of comment pieces by Sky News editors and correspondents, published every morning.

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