EU economic powerhouses to oppose subsidy cuts

France, Germany and Britain plan to issue a negative response to European Union (EU) plans to overhaul state aid programmes.

France, Germany and Britain plan to issue a negative response to European Union (EU) plans to overhaul state aid programmes, reports UPI.

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EU Competition Commissioner Neelie Kroes, in an interview with the Financial Times last week, proposed reforms on state aid that would shift subsidies from big ailing companies to small and mid-sized businesses.

Kroes explained: "I am talking about less and better state aid, focusing on those regions that really need state aid ... focusing on risk capital, research and innovation and on small and medium-sized companies."

However, Germany, Britain and France, which receive the majority of state aid, called the proposal "unacceptable". The three nations are planning to issue a joint reply to Kroes' plans.

The three countries fear without financial incentive, companies will locate to new members states where labour costs are cheaper.

According to the latest figures available, in 2002 $64 billion were injected into the EU to help subsidise companies.