State aid actions
To mitigate the economic shocks and save businesses, the European Commission put in place flexible State aid rules, allowing Member States to provide direct support for hard hit businesses, particularly small firms. The Temporary Framework for State aid measures, adopted on 19 March 2020 provided for five types of assistance:
- direct grants (or tax advantages);
- subsidised state guarantees on bank loans;
- public and private loans with subsidised interest rates;
- existing lending capacities, and using them as a channel for support for businesses – in particular to small and medium enterprises. This aid is directed to bank customers and not to the banks themselves;
- additional flexibility to enable short-term export credit insurance to be provided by the state where needed.
The aim of these measures was to ensure that businesses retain the means to keep operating, or to temporarily freeze their activity, without implicating long-term growth prospects. The Framework complemented the many other possibilities already available to Member States in line with State aid rules. These were set out in the Communication on a coordinated economic response to the coronavirus outbreak of 13 March 2020.
Overview of the results
The Commission has published a State aid brief on the use of the COVID Temporary Framework. In 2020 and 2021, the Commission has taken around 1185 decisions approving more than 865 national measures notified by Member States for an overall budget of over €3.1 trillion. In order to have a better overview of the actual aid paid out, the Commission has launched surveys to seek information from Member States on the implementation of coronavirus-related State aid measures. Based on data provided, in the period between mid-March 2020 and the end of 2021, of the over €3.1 trillion in aid approved during that period, €940 billion (around 30%) was actually granted to businesses, around two-thirds of which in the form of state-backed credit, either guarantees or subsidised loans.
The State aid Temporary Framework was extended and amended several times throughout the pandemic to provide the best possible support, as follows:
- On 3 April 2020, amended to increase possibilities for public support to research, testing and production of products relevant to fight the coronavirus outbreak, to protect jobs and to further support the economy;
- On 8 May 2020, amended to enable recapitalisation and subordinated debt measures;
- On 29 June 2020, amended to further support micro-, small- and start-up companies and to incentivise private investments;
- On 13 October 2020, amended to prolong and expand the Temporary Framework and enable aid covering part of the uncovered fixed costs of companies affected by the crisis;
- On 28 January 2021, amended to expand the scope of the Temporary Framework by increasing the ceilings for certain support measures, and allowing the conversion of certain repayable instruments into direct grants until the end of 2022 for Member States, to make full use of the state aid rules’ flexibility while limiting distortions to competition;
- On 18 November 2021, the Commission set out future of Temporary Framework to support economic recovery in context of coronavirus crisis.
On 11 February 2021, the Commission published an additional State aid guiding template to assist Member States in the design of the national recovery and resilience plans in line with the EU State aid rules, with respect to supporting the digitalisation of news media. This followed the publication of eleven State aid guiding templates in December 2020.
Further information can be found on the Commission’s State aid webpages: State aid in the context of the coronavirus pandemic
Phasing out the State aid COVID Temporary Framework
The European Commission will phase out the State aid COVID Temporary Framework. The Framework was not extended beyond 30 June 2022 for most of the tools provided.
The existing phase-out and transition plan has not changed, including the possibility for Member States to provide specific investment and solvency support measures until 31 December 2022 and 31 December 2023 respectively, as already announced in November last year.
Recovery and Resilience Facility
As Europe moves from crisis management to economic recovery, State aid control will also accompany and facilitate the implementation of the Recovery and Resilience Facility. In this context, the Commission will:
- engage with Member States to ensure investment projects supported by the Recovery and Resilience Facility are compatible with State aid rules. Indeed, certain infrastructure investments and direct support to citizens, fall outside State aid rules altogether and many measures do not need to be notified since they fall under block exemptions;
- and provide guidance to Member States as regards the flagship investment projects, including by providing templates.
Supporting the public short-term export credit market
As enterprises faced a severe lack of liquidity and their trading conditions were increasingly exposed to financial risks, private insurers were withdrawing from the short-term export-credit market. As a result, all economically justifiable risks for exports to all countries in the world, including all Member States could no longer be sufficiently covered. The European Commission therefore decided on 27 March 2020 to temporarily remove all countries from the list of “marketable risk" countries under the Short-term export-credit insurance Communication. This aimed to make public short-term export credit insurance more widely available in light of the crisis. The amendment further expanded on the flexibility introduced by the Commission's State aid Temporary Framework with respect to the possibility by State insurers to provide insurance for short-term export-credit.
On 13 October 2020, the Commission decided to extend until 30 June 2021 the temporary removal of all countries from the list of “marketable risk" countries under the short-term export-credit insurance Communication.
Member States
Click on a country below to see the latest details of these measures.
