The European Commission adopted, on Thursday 19 March, a Temporary Framework valid until the end of 2020 to allow Member States to use "the full flexibility" foreseen under State aid rules to support the economy hit by COVID-19 (see EUROPE 12448/4).
Combined with many other support measures available to Member States under existing State aid rules, the Temporary Framework enables countries to ensure that sufficient liquidity remains available to businesses of all types and to preserve the continuity of economic activity during and after the COVID-19 outbreak, the Commission explains.
This Temporary Framework (which had been submitted to Member States for consultation) provides for five types of aid: - direct grants, selective tax advantages and advance payments. Member States will be able to set up schemes to grant up to €800,000 (€500,000, depending on the initial project) to a company to meet its urgent liquidity needs; - state guarantees to ensure that banks continue to provide loans to customers who need them; - loans at favourable interest rates for businesses (to help them cover their immediate working capital and investment needs); - safeguards for banks that channel State aid to the real economy. Some Member States plan to build on banks' existing lending capacities. The Framework makes clear that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks; - short-term export credit insurance. The Framework introduces additional flexibility, allowing the State to provide short-term export-credit insurance, if necessary.
Given the limited size of the EU budget, the main response will come from Member States' national budgets.
See the new state aid rules: http://bit.ly/33DwMxu (Original version in French by Lionel Changeur)