The Government has received EU backing to open the purse strings to help businesses at risk from Brexit.

The EU has moved to relax stringent state aid rules as Britain threatens the dairy and beef sectors with trade war tariffs and a hard Border is imminent.

In an unprecedented development, the makers of Dubliner cheddar cheese will be the first company in Europe to benefit from approval to get state support to ride out the effects of Brexit, the Irish Independent has learned. It sets a precedent and will be watched closely across the EU.

The Cork-based Carbery Group is understood to have secured EU pre-approval to receive €6m from Enterprise Ireland as part of a larger €65m investment without being seen to breach state aid rules.

The money will fund diversification of the business, including finding alternatives to the UK market.

Almost half of Irish cheddar is exported to the UK.

There is no suggestion Carbery requires a rescue or is in any financial difficulty. However, winning approval to take on Enterprise Ireland investment will help the company shift production into mozzarella.

The cap for grant aids for farms will rise from €15,000 to €25,000 over three years under the new package.

EU state aid rules restrict government investment in companies and are heavily policed by Commissioner Margrethe Vestager, due to the risk of creating an uneven playing field for firms from different member states.

The approval for Carbery is a major coup for Business Minister Heather Humphreys and EU Agriculture Commissioner Phil Hogan.

Owned by four farmers’ co-operatives, Carbery has 600 employees, eight plants and is active in 50 countries with sales in 2017 of €417m.

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