The Government will no longer be able to give State aid to companies setting up or expanding in Dublin and surrounding counties from next year, following the introduction of stiffer European Union rules.
State aid for Cork-based industry will finish at the end of 2008, while only small and medium-sized firms will qualify for State aids in the mid-west beyond 2008, under new rules.
Delicate negotiations on the proposal's small print are still under way between the Departments of Finance, and Enterprise, Trade and Employment and the European Commission, but the key points, as detailed above, have already been agreed with the EU's competition directorate.
A memorandum on the politically controversial issue from the Department of Enterprise, Trade and Employment went to the Cabinet over a fortnight ago, though Ministers have so far not discussed the matter in detail, The Irish Times understands.
However, the Government will still be able to give grants for research and development, which will be increasingly important as Ireland seeks to attract more high-tech industries, and for environmental purposes.
The Mid-West region, which is deemed on this occasion by the Government to include Kerry, will be able to offer grants of up to 10 per cent to cover the start-up costs of €100 million-plus industrial operations up to the end of 2008.
Once it is no longer able to back the largest firms, the mid-west region, however, will still be able to continue to offer much larger grant aids to small and medium-sized enterprises until the State aid deal, which runs until 2013, finishes.
The IDA and other agencies will be able to offer large firms grants to cover up to 10 per cent of their start-up costs until the end of 2008, though the figures increase to 20 per cent for medium-sized firms, and 30 per cent for small enterprises.
The IDA and other State agencies will be able to continue to offer firms State aid to set up in the Border, Midlands and West region, though the rates on offer are to fall and are to drop again in 2011.
Covering nearly half of the State's land mass but holding just 27 per cent of the population, the BMW region is composed of Donegal, Leitrim, Sligo, Mayo, Galway, Laois, Offaly, Westmeath, Longford, Roscommon, Cavan, Monaghan and Louth.
Firms moving to, or expanding in, Wexford, Waterford, Kilkenny, Carlow and Tipperary South will continue to qualify for State aids, though the grant amounts will fall.
Though separate from EU structural funds, the state aid issue is linked to them because EU regions must be in receipt of such funds to some degree before they are allowed to offer industrial grant aid.
Now one of the EU's richer states, Ireland was always going to be fighting a rearguard action to hold on to any of its past advantages.
The new restrictions will take into account all past State investments in particular companies, so future expansions by already established operations, such as Intel in Kildare, could be affected.
