EU to study Renault subsidies

The European Commission will look into Nicolas Sarkozy’s subsidies for Renault car production in France to ensure they do not amount to a protectionist distortion of the single market, Britain's Trade Commissioner Catherine Ashton confirmed today.

But Ashton said it appeared Mr Sarkozy was taking “the right approach” by insisting support for French workers would not cost the jobs of Renault employees elsewhere in the European Union.

Renault’s €7.5bn state aid sparked controversy yesterday after the car company announced it would create 400 jobs at a plant near Paris by repatriating production of the Clio from Slovenia.

But Mr Sarkozy sought to damp down the row by insisting the move would not cost “one single job in Slovenia”, as Renault would step up production of its Twingo model there.

Ashton said Competition Commissioner Neelie Kroes “will be looking carefully to make sure that in giving subsidies we are not affecting the single market or trade”.

She said it was the responsibility of national governments to support their economies through the crisis and the responsibility of Brussels to maintain the functioning of the EU internal market.

But she added: “A fundamental part of how we are going to get out of this recession is by keeping trade flowing ... It is fundamental to our ability to return to economic growth right across the world.

“Although it is difficult and although sometimes it is easier to put the shutters down and say ’Let’s keep our economy going by just thinking about ourselves’, in the end it will damage us all and that is what we have got to avoid.”