RAGS Reform: retrench and retreat – a review of Commission proposals for the reform of the Regional aid guidelines 2022-27

River delta

Since 2019, the European Commission has been engaged in reviewing the key elements of the State aid modernisation package, including the Regional Aid Guidelines (RAGS). It has recently consulted on new draft RAGS with a view to their adoption in early 2021 and the application of new maps from the start of 2022. The consultation ends on 30 September 2020. The review process has seemed somewhat disorderly. Delays in getting it underway have necessitated the prolongation of the General Block Exemption Regulation (GBER) and of RAGS 2014-20; neither are now synchronised with the Cohesion Policy calendar. The Commission concluded from the various reviews that the regional aid rules work well and proposed only modest changes in its consultation documents. Specifically:

  • the regulatory architecture remains the same, but only the RAGS and not the GBER are part of this consultation;
  •  there are small changes in sectoral scope partly to align the RAGS with Green Deal and Digital agendas, and to dovetail their scope with other guidelines;
  • EU spatial coverage is similar to current levels, but there are significant differences for individual countries;
  • the criteria for selecting eligible areas are the same, but specific accommodation is made for Just Transition Areas ;
  • aid intensities are increased for most eligible areas; and
  • aid for process innovation by large firms in ‘c’ areas is excluded from eligibility.

This short paper sets out the Commission proposals for the RAGS and asks whether the Commission is right to conclude that the rules work well. In particular:

  • Should the impact of Brexit have been factored into spatial coverage? Are there concerns at how differentiated the outcomes are?
  • What are the implications of determining assisted area coverage with pre-COVID-19 era data? How relevant is regional aid in addressing the impacts of COVID-19?
  • Do the increases in aid intensities address a genuine concern among granting authorities?
  • Should the Commission have considered relaxing the rules on aid to large firms in ‘c’ areas?
  • Does the loss of alignment in the RAG, GBER and Cohesion Policy calendars matter in principle or in practice?
  • The RAGS proposals ‘nod’ to the Green Deal and the Digital Strategy. Could and should they do more?