State aid: Commission approves €20 billion Spanish guarantee schemes for companies and self-employed affected by coronavirus outbreak

covid19 bus

(Nick Fewings, Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has found two Spanish guarantee schemes for companies and self-employed workers affected by the coronavirus outbreak to be in line with EU State aid rules. The schemes, with a total budget of approximately €20 billion, were approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The economic impact of the coronavirus outbreak is severe. Together with Member States, we are working to alleviate this impact as much as we can. And we need to act in a coordinated manner. With these two Spanish guarantee schemes on new loans and refinancing operations Spain will support self-employed workers and small and medium-sized enterprises affected by the coronavirus outbreak to weather the crisis. The schemes have a total budget of approximately €20 billion and we have approved them today under the new State aid Temporary Framework. We continue working closely with Member States to ensure timely support to their economy through these difficult times.”

The Spanish support measures

Spain notified to the Commission under the Temporary Frameworktwoguarantee schemes on new loans and refinancing operations for (i) self-employed workers and small and medium-sized enterprises (SMEs); and (ii) larger companies, all affected by the coronavirus outbreak. The schemes have a total budget of approximately €20 billion.

The guarantee measures aim at limiting the risks associated with issuing operating loans to companies that are severely affected by the economic impact of the coronavirus outbreak. The objective of the measures is to ensure that these companies have liquidity to help them safeguard jobs and continue their activities faced with the difficult situation caused by the coronavirus outbreak.

The Commission found that the Spanish measures are in line with the conditions set out in the Temporary Framework. In particular, they cover guarantees on operating loans with a limited maturity and size. They also limit the risk taken by the State to a maximum of 80% for self-employed workers and SMEs and of 70% for larger enterprises. This ensures that support is swiftly available at favourable conditions and limited to those who need it in this unprecedented situation. To achieve this goal, the measures also involve minimum remuneration and safeguards to ensure that the aid is effectively channelled by the banks or other financial institutions to the beneficiaries in need.

The Commission concluded that the Spanish guarantee schemes for companies and self-employed workers will contribute to managing the economic impact of the coronavirus outbreak in Spain. The measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.

Background

The Commission has adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework provides for five types of aid, which can be granted by Member States:

(i)          Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.

(ii)         State guarantees for loans taken by companies from banks: Member States will be able to provide State guarantees to ensure banks keep providing loans to the business customers who need them. These state guarantees can cover loans to help businesses cover immediate working capital and investment needs.

(iii)        Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

(iv)        Safeguards for banks that channel State aid to the real economy: Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. 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.

(v)         Short-term export credit insurance: The Framework introduces additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the State where needed. On 23 March, the Commission launched an urgent public consultation with a view to establish if public short-term export credit insurance should be made more widely available in light of the current crisis linked to the coronavirus outbreak. More specifically, the public consultation aims at assessing the availability of private short-term export-credit insurance capacity for exports to all countries listed as “marketable risk countries” in the 2012 Short-term export-credit Communication. Depending on the results of the consultation and taking into account the relevant economic indicators, the Commission then may decide to remove countries from the list of “marketable risk countries” as a temporary measure.

The Temporary Framework will be in place until the end of December 2020. With a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended.

The Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The non-confidential version of the decision will be made available under the case number SA.56803 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the temporary framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Will Cameron succeed in keeping UK inside the EU and reverse the present economic downturn?

Commission reports on 2019 European elections: fostering European debates and securing free and fair elections

Switzerland fast-tracks emergency aid for small businesses weathering COVID-19

EU Commission: Banking and energy conglomerates don’t threaten competition!

Sustainable finance: Commission publishes guidelines to improve how firms report climate-related information and welcomes three new important reports on climate finance by leading experts

Black babies more likely to survive when cared for by Black doctors, suggests new study

De-stigmatizing a mental illness: importance of individual and collective representativeness

How youth and technology can drive Africa’s COVID-19 response

This cheap, 700-year old solution could change billions of lives

Boosting the EU’s Green Recovery: EU invests over €2 billion in 140 key transport projects to jump-start the economy

All sides in Yemen conflict could be guilty of war crimes, UN experts find

We need to rethink neuroscience. And you can help us

The winds of change: 5 charts on the future of offshore power

Who and why want the EU-US trade agreement here and now

Who will secure Lithuania?

Betazone: The Beauty of Inclusion

Coronavirus Global Response: Commission joins the COVID-19 Vaccine Global Access Facility (COVAX)

Facts, not fear, will stop COVID-19 – so how should we talk about it?

China’s impact as a global investor; the Sting reports live from World Economic Forum 2015 in Davos

UN chief condemns air strike that hit school bus in northern Yemen, killing scores of children

This crisis cannot be confronted with statistics

Latvian economy is thriving, but boosting productivity, improving social protection and transitioning to a low-carbon productive model are vital for sustainable and inclusive growth

Chart of the day: These countries have seen the biggest falls in extreme poverty

EuroLat: serious concern about migration and support to multilateral trade

France-Germany: Divided in Europe, USA united in…Iran

Fail fast, fail better: 3 ways companies can master innovation

Malaria: Focus on pregnant women and children, stresses UN health agency report

How to change the world at Davos

Powering through the pandemic

Energy: new target of 32% from renewables by 2030 agreed by MEPs and ministers

Here’s how to make ‘value-based healthcare’ a reality

It’s time to switch to a four-day working week, say these two Davos experts

What if nature became a legal person?

A new era of computing is coming. How can we make sure it is sustainable?

A win-win strategy for private equity deals

Afghans entitled to live ‘free from fear, intimidation’, says UN chief, condemning suicide attacks

Female leaders warn about the erosion of women’s rights

9 climate tipping points pushing Earth to the point of no return

Eurasian Union begins: the giant modelled on the EU is Moscow’s biggest challenge

Guinea-Bissau needs ‘genuinely free and fair elections’ to break cycle of instability

WHO chief underscores need to address climate change following visit to Bahamas

Japanese law professor elected new judge at the International Court of Justice

A new dawn for Europe: Joint op-ed by President von der Leyen, President Michel and President Sassoli

Education expenditure in the EU not hurt much by crisis

Billions for sustainable investments – Germany’s plan for a green recovery

Prevent future crises and empower youth – now!

Will ECB win against low inflation by not following Quantitave Easing?

We can save the Earth. Here’s how

Do not confuse food charity with ‘right to food’, UN expert tells Italians, labelling food system exploitative

Listen to the future – how 26 youth-led organizations are supercharging the UN’s Global Goals

The decline of our oceans is accelerating, but it’s not too late to stop it

European Commission 2020 Work Programme: An ambitious roadmap for a Union that strives for more

Brexit: Six more months of political paralysis or a May-Corbyn compromise?

MEPs commend Ukraine‘s reform efforts and denounce Russian aggression

ECB asks for more subsidies to banks

Work and reforms of the UN ‘at risk’, Guterres warns Member States, amidst ‘record-level’ cash crisis

Pollution could be harming every part of your body. Here’s how

Cameron’s Conservatives and UKIP are exploiting and cultivating anti-EU immigration sentiment but Labour party isn’t?

A jingoistic Spanish ‘war’ from the past

Search Engine neutrality in Europe in danger: Are 160.000 Google filtering requests good enough?

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s