Subsidies for Rolls-Royce? At first blush the UK engine-maker’s request for government money looks absurd. Here is a successful FTSE 100 group — shares have more than doubled in the past year — set to spend as much as £1.5bn buying back its own shares. While it churns out cash, the UK government sits on a massive deficit.
But the real question isn’t whether subsidies should be eschewed altogether — that ship has truly sailed — but how to use them judiciously. Washington, after all, has gone from calling foul on other nations’ use of largesse to jumping in with both feet. Germany, witnessing industrial decline, is disbursing money across sectors; the EU is mobilising €100bn for clean manufacturing alone.
More pertinently, Rolls-Royce’s rivals are beneficiaries of government support; GE Aviation of the US even pocketed funds from the Welsh government for its maintenance and repair site in Nantgarw. Pratt & Whitney has received hundreds of billions of dollars from Canada. So ingrained is the habit that dishing out subsidies now levels, rather than distorts, the playing field.