Welcome to the European Parliamentary Research Service podcast on state aid in the European Union.

Under EU rules, state aid is not allowed unless it has a social character or is used to promote economic development.

For example, when tackling the challenges of global competition, the ongoing financial crisis, the digital revolution or demographic change.

The European Parliament agrees with this general principle, but calls for less and better targeted state age in the future.

Want to know more? Stay with us.

Adam Smith's Invisible Hound theory, according to which a self-regulatory market force would

automatically bring markets to equilibrium through the free demand and supply mechanism

has proven to barely work in practice. It was never really embraced by EU member states.

And actually all of them use state aid to support their economies, albeit to varying degrees.

So is state aid exactly?

The European Commission defines state aid as an advantage given by government

that may provide a company with an unfair competitive edge over its commercial rivals.

Such state aid can be delivered in many different ways.

For example, through the allocation of

grant subsidies, the provision of interest and tax relief, or the purchasing of goods and services

on preferential terms. EU rules generally prohibit state aid unless it is deemed necessary to

stimulate the economy, and it falls on the European Commission to ensure that they're applied and observed

equally across the Union. So under which circumstances would state aid be considered

compatible with the internal market? Well, aid having a social character and granted to individual

consumers, for example, or aid to promote the economic development of regions which are lagging

behind or have serious unemployment problems, even aid to promote the economic development of regions which are lagging behind or

have serious unemployment problems, even aid to carry out an important project of common

...