For the solvent North, this is not just guilt money, but a way of shoring up a single market increasingly shot through with competitive distortions and trading imbalances. With its love of national champions and its interventionist traditions, France has never been a fan of the “Thatcherite” single market. Nothing would please Macron more than to see it reborn in France’s own dirigiste image.
Germany’s position is a more nuanced one – reluctant acknowledgement that Covid is forcing Europe into a different approach to state aid. Berlin nonetheless seems more than happy to capitalise on its own solvency to further strengthen its industrial clout.
Embarrassingly for the EU, Covid has brought out an unseemly “everyman for himself mentality” among states, of which the greatest offender of the lot is Germany, first with its initial refusal to share medical supplies with Italy, and now in saving its own economy.
In taking baby steps towards the previously unconscionable idea of a transfer union, Germany is offering a kind of recompense.
But is it enough to save Europe’s single market from further rupture? If Germany is allowed to subsidise all it likes, it undermines the whole “level playing field” purpose of what’s meant to be the world’s most perfect free trade zone, and makes it into something quite different.
It is a bit rich that EU negotiators continue to make a meaningful trade deal with the UK conditional on British subservience to EU state aid rules. State aid is being thrown around like confetti within the EU’s own borders, but Brussels seemingly wants to deny that option among those it trades with externally. Global Britain is a noble ambition, but it is not one a fast deglobalising world seems minded to accommodate.