Britain needs new state aid rules in order to be able to protect itself against hostile states intent on stealing technological secrets and jobs, Rishi Sunak has said.
The chancellor said the UK had benefited from foreign investment but the government had to keep its eyes wide open to possible threats.
In a discussion on the professional networking platform Linkedin, Sunak did not mention any country by name, although a decision was taken in the summer to ban China from being involved in the development of Britain’s 5G network from 2027.
“We have always been a country open to foreign investment and it has been very good for us,” the chancellor said. “It has driven up productivity and is part of what makes our economy dynamic.
“But we really need to be eyes wide open because, sadly, in the world in which we’re living there are hostile state actors that come to invest and try to extract technology out of the UK, or indeed jobs,” he added.
The UK’s determination to adopt a different state aid regime from that operating in the European Union has been a major sticking point in the trade talks between London and Brussels, and remains one of the key issues yet to be resolved.
Sunak said it wasn’t his intention to use state aid to meddle with market forces.
“I am cautious about the government’s ability to pick precise winners,” he said, adding that his aim was to create the environment where successful companies could thrive.
Instead, the chancellor said the intention was to tighten rules and laws so that the UK could protect itself against those with hostile intentions. “This gives us the power to intervene if necessary,” he said.
Sunak also made it clear that the high levels of spending and borrowing seen since the start of the Covid-19 crisis would have to end.
“We have had to spend a lot this year and have had to borrow a lot to do that,” he said. “That was the right thing to do. The situation would have been a lot worse without it.”
With the government’s budget deficit on course to exceed £300bn this year, Sunak said: “Obviously that level of support can’t go on for ever. Our public finances are important and I’ve been able to act in that way because we came into the crisis with strong public finances that enabled me to take the steps that I have.”