Brussels, 07/12/2009 (Agence Europe) - The latest state aid scoreboard published by the European Commission on Monday 7 December, shows that the financial downturn led to a large increase in public subsidies. The overall level of state aid almost quintupled in 2008 compared with 2007, “almost exclusively” as a result of crisis aid to the financial sector, the report says.
Total state aid granted by member states amounted to €279.6 billion in 2008, or, in relative terms, 2.2% of EU27 GDP. Crisis measures reported by member states in 2008 amounted to €212.2 billion, or 1.7% of GDP. In that year, 13 member states (Belgium, Denmark, Germany, Ireland, Spain, France, Latvia, Luxembourg, the Netherlands, Portugal, Finland, Sweden and the United Kingdom) granted crisis aid to the financial sector. By the end of October 2009, all EU15 member states, along with Hungary, Latvia and Slovenia had had their financial crisis measures approved by the Commission.
Crisis measures approved and take-up rate. Between October 2008 and the end of October 2009, the Commission approved 73 crisis measures. These comprise 32 schemes (guarantee schemes, recapitalisation schemes, liquidity interventions, asset relief interventions) and 41 individual cases.
The total maximum volume of crisis measures approved by the Commission during this period amounted to around €3,632 billion, or 29% of EU27 GDP. The maximum volume for guarantee schemes amounted to €2,738 billion, corresponding to 22% of EU27 GDP. Recapitalisation measures amounted to €231, or 2% of EU27 GDP. General liquidity measures and asset relief interventions amounted to €76 billion, or 0.6% of EU GDP. The Commission also took decisions on several ad hoc intervention cases in favour of individual financial institutions, amounting to a total volume of €587 billion.
Most of the general schemes were authorised by the Commission in autumn 2008, following the publication of the banking and recapitalisation communications. The measures approved in 2008, schemes and ad hoc aid taken together, amounted to €3,361 billion. In 2009, member states saw only limited further need to set up new, additional support measures, the Commission says. From January to March 2009, further rescue and stabilisation measures amounting to €96 billion were approved by the Commission. Since 2009, member states have only adopted additional measures with an overall maximum volume amounting to €175 billion.
The take-up rate by banks is defined as the actual use of the measure relative to the notified approved amounts. The take-up rate in the crisis measures, as reported by the Commission, is roughly 33% with respect to guarantees and approximately 55% for recapitalisation.
€67.4 billion in total, excluding crisis measures. Excluding crisis measures, total state aid amounted to €67.4 billion, or 0.54 % of EU27 GDP, in 2008. Aid to industry and services represented 78% of total state aid. Aid to the coal industry was allocated to industry and services. It amounted to €2.7 billion, of 4.1% of total aid. The remainder of aid was shared among agriculture (€11.8 billion, or 17.5% of total aid), fisheries (€0.2 billion, or 0.4% of total aid), and transport (€2.4 billion, or 3.6 of total aid). Aid to railways is reported by member states to have amounted to €46 billion, or 0.4% of EU GDP. The five countries which granted the highest aid provided €40.5 billion, or 60% of total aid. Germany paid out €15.7 billion, or 23% of total aid, followed by France (€10.3. billion, 15%), Italy (€5.5 billion, 8%), Spain (€5.2 billion, 8%) and the United Kingdom (€3.8 billion, 6%). A completely different picture emerges when aid is looked at as a percentage of GDP: Hungary granted aid equivalent to 2.4% of its GDP, followed by Malta (2%), Bulgaria (1.3%) and Finland and Ireland (both 1.1%).
Enforcement. The scoreboard notes further progress in the recovery of illegal and incompatible aid. At the end of June 2009, €9.4 billion had been recovered. Only 9% of unlawful aid was still outstanding, which means that 91% of total illegal and incompatible aid had been repaid by those to whom it had been paid out, compared with only 24% at the end of 2004. (L.C./transl.rt)