Temporary state aid measures to mitigate economic shocks

Photo: EU Margrethe Vestager

A Temporary Framework to enable EU countries to use the full flexibility foreseen under State aid rules to support the economy in the context of the Covid-19 outbreak, was tabled by the Commission. Thus, Member States can ensure that sufficient liquidity remains available to businesses and preserve the continuity of economic activity during and after the epidemic.

The framework will be in place until the end of December 2020 and with a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended. Stating that the economic impact of the Covid-19 outbreak is severe, Executive Vice President Margrethe Vestager, in charge of competition policy, emphasised that the new Temporary Framework enables Member States to use the full flexibility foreseen under State aid rules to support the economy at this difficult time.

The framework provides for five types of aid, one of which is direct grants, selective tax advantages and advance payments. Under this Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.

For the same purposes Member States will be able to provide State guarantees to ensure banks keep providing loans to the customers who need them. Also are foreseen subsidised public loans to companies, safeguards for banks that channel State aid to the real economy and short-term export credit insurance. Because of the limited size of the EU budget, the main response will come from Member States' national budgets.

More on this subject: Coronavirus

Similar articles