There has been a lot of chatter in the press recently about the UK government being likely to relax the state aid rules that prevent UK companies in certain industries from being bought by foreign buyers.

Such restrictions could be removed for certain sectors such as transport, professional services and financial services and in this case a less restrictive regime could see future cross-border mergers fall foul of local anti-trust laws. This would have a chilling effect on inward investment, endangering the digital economy that is the UK’s economic future.

A cluster of UK companies has been accused of collaborating to gain monopolies and stifle competition in the digital economy. Such collusion can lead to actionable claims in Germany, Belgium and the Netherlands. In 2016, a unit of Deutsche Boerse was ruled by European Union competition authorities to have broken the rules after its failed attempt to acquire London Stock Exchange, which resulted in the UK’s Brexit vote. The German cartel office subsequently concluded that a merged Deutsche Boerse and LSE would have given the subsidiary an unfair advantage in the acquisition market.

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Clearly there are issues that need addressing. But reducing state aid regulations to fit a world beyond competitive markets would be a major error.

With the trading blocks in the UK still unlikely to be abolished by Britain leaving the EU, the UK should be strengthening its state aid regime. It will be vital to the UK’s ability to negotiate a Brexit deal that minimises disruption and maximises its future trading relationships outside the EU. Over the long term, liberalising access to cross-border markets in financial services is essential for the UK economy.

A further concern is that a relaxation of EU anti-trust regulations may embolden other sectors to pursue similar mergers that should be done by both UK and EU law. The UK’s markets watchdog has expressed concerns about the long-term effect of the merger of BHS, formerly known as British Home Stores, and Primark. It is understandable that these firms should fall foul of UK law but dealing with this episode by allowing their merger to proceed is not an appropriate way to make this happen.

I trust that the government will not relax rules on state aid. A more balanced approach is necessary to encourage UK multinational companies to remain true to their British heritage.

Michael Pooler is a barrister specialising in competition law