BRUSSELS, Belgium (AP) -- The financial crisis is forcing European Union member countries to reverse two decades of decline in state subsidies for companies, the European Commission said Tuesday.European governments have spent billions of euros (dollars) bailing out troubled banks in recent months and may spend more to stoke growth as the economy slows after the financial crisis froze lending.
The high cost of these bailouts will reverse a trend over the last 25 years that saw EU state aid drop from more than 2 percent of gross domestic product to around 0.5 percent in 2007, the EU said.
The EU executive said subsidies had fallen since the 1980s because of a growing awareness that government money favoring one company or sector can hold back competition and damage the economy. It also credited its own work in policing strict EU state aid rules that limit what subsidies governments can dole out.
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