Econostrum | Economic News in the Mediterranean

European Commission extends provisional state aid guidelines

Written by Eric Apim on Thursday, November 18th 2021 à 15:55 | Read 212 times

The European Commission is extending the flexibility on state aid (photo: CG)
The European Commission is extending the flexibility on state aid (photo: CG)
EU. On Thursday 18 November 2021, the European Commission decided to extend the temporary framework for state aid until 30 June 2022. This procedure, adopted on 19 March 2020 in the context of the coronavirus epidemic, allows EU members more flexibility in relation to European rules. The texts provided for validity only until 31 December 2021.

"Since the beginning of the pandemic, the temporary state aid framework has allowed Member States to provide targeted and proportionate aid to companies in need, while at the same time putting in place safeguards to preserve a level playing field in the single market," said Margrethe Vestager, executive vice-president of the European Commission, responsible for competition policy.

The six-month bonus gives Member States the opportunity to "extend their aid schemes and ensure that companies still affected by the crisis are not suddenly deprived of the necessary support", as a press release states.

Two new tools

In addition to this extension of the deadline, and in order to speed up the economic recovery, the European Commission is introducing two new tools. The first concerns investment support measures to assist Member States in their efforts to catch up on the investment gap created by the crisis. They will be able to create incentives to encourage companies to invest and use this tool to accelerate the ecological and digital transitions. One main condition, however, is that these supports must target a broad group of beneficiaries and their amounts must be limited.

The second tool created concerns credit support measures to mobilise private funds for investment in SMEs and start-ups. "Member States may grant guarantees to private intermediaries, thereby creating incentives to invest in the types of companies targeted and giving these companies easier access to equity financing, which they often find difficult to attract individually," the European Commission says. This type of measure, which is "of particular interest given the rise in corporate debt during the crisis", will be available until 31 December 2023.

At the same time, Member States will finally have until 30 June 2023 (the temporary framework was to end on 30 June 2022) to convert certain repayable instruments (guarantees, loans, repayable advances, etc.) into other forms such as direct grants. The European Commission has also adapted, in proportion to their extension, the maximum amounts of certain types of aid. At the same time, it has clarified the exceptional flexibility provisions for rescue and restructuring aid, which have only been extended for three months, until 31 March 2022.

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