As European governments rush to rescue tottering banks, insurers, carmakers and sundry other credit squeeze victims, rules banning unfair subsidies risk being trampled underfoot. So far, state aid regulations, designed to eliminate assistance that penalises rivals, distorts the single market and erodes competitiveness, have emerged less bloodied than might have been feared. But they remain in danger.

The European Commission was almost overwhelmed in early October as member states scrambled to avert a banking collapse. It regained the initiative in mid-October by issuing a framework for bank recapitalisation and guarantee schemes within existing state aid rules. An exception clause in the European Union’s founding treaty allowing aid to remedy a “serious disturbance” in a state’s economy, used only twice before, has now been applied some 20 times. That has at least enabled the Commission to remain within the letter of the law – which, even in normal times, provides scope for aid subject to specific conditions.