State aid: Commission approves Luxembourg guarantee measure to further support economy in coronavirus outbreak

Luxembourg 2020_

(Polina Sushko, Unsplash)

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


The European Commission has approved today another Luxembourg State aid scheme to support the Luxembourgish economy in the context of the coronavirus outbreak. The scheme was 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 Luxembourg scheme that we approved today enables the granting of guarantees on loans at favourable terms to help business cover immediate working capital and investment needs and continue their activities in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, in line with EU rules.”

The Luxembourg support measure

Following the approval of the Luxembourg measure adopted on 24 March 2020, Luxembourg notified to the Commission an additional support measure under the Temporary Framework in the form of guarantees on loans.

The scheme is open to all companies, except those active in the promotion, renting and sale of building as well as holding of investments. It enables the granting of guarantees on loans at favourable terms to help businesses cover immediate working capital and investment needs.

The Commission found that the Luxembourg measure is in line with the conditions set out in the Temporary Framework. In particular, (i) the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future, (ii) the guarantees will only be provided until the end of this year, (iii) the guarantees are limited to a maximum six-year duration, and (iv) companies pay guarantee premiums as set out in the Temporary Framework.

The Commission concluded that the measure is 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 measure 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 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 introduced 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 27 March, the Commission further expanded on that flexibility: following an urgent public consultation, the Commission decided to amend the Annex to temporarily remove all countries from the list of “marketable risk” under the Short-term export-credit insurance Communication. This will make public short-term export credit insurance more widely available in light of the current crisis linked to the coronavirus outbreak. Following the amendment, State insurers will in principle be able to step in and provide insurance for short-term export-credit risk for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable.” This amendment will be in place until 31 December 2020, with a possibility to review beforehand.

 

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.56805 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.

Advertising

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

Feeling the heat? This is how to keep cool as temperatures rise

Brazil’s hopeless future of science

UN chief sends condolences to families of Malawi flood victims

Denouncing attacks against Baghdad protesters, UN warns ‘violence risks placing Iraq on dangerous trajectory’

UN chief commends African Union on adoption of institutional reforms

The entire Australian state of New South Wales is in drought

What will it take for the world’s third-largest economy to empower women?

ECB’s unconventional monetary measures give first tangible results

On International Youth Day the European Youth Forum calls for true youth participation

For how long will terror and economic stagnation be clouding the European skies?

FROM THE FIELD: Rohingya babies conceived out of ‘incomprehensible brutality’

IMF’s Lagarde: Ukraine must fight corruption

These are the world’s healthiest nations

Happens now in Brussels: Green Week sets the EU and global climate policy agenda

New UN report launched to help ratchet up action to combat climate crisis

Why Commissioner Rehn wants us all to work more for less

COP21 Breaking News_09 December: List of Recent Climate Funding Announcements

EU to give more power to national antitrust authorities in a bid to secure regulatory fines

In Chad, top UN officials say humanitarian response must go ‘hand in hand’ with longer-term recovery

The space internet race is dawning. Here’s what to expect

International tourism is set to plunge by 80% this year – but some regions could recover more quickly

Connectivity and collaboration in the ICT industry: the key to socio-economic development

5 amazing schools that will make you wish you were young again

Chatterbox Rome Declaration cannot save the EU; Germany has to pay more to do that

Coronavirus has exposed human rights gaps. We need to fix this

Trump’s Pandemic Failure: A Missed Opportunity

Main results of Foreign Affairs EU Council, 16/07/2018

Egypt urged to free prominent couple jailed arbitrarily since last June: UN rights office

Polish PM chooses to focus on economy, amid questions on rule of law in Poland

Brexit kick-off: a historic day for the EU anticlockwise

Avocado: the ‘green gold’ causing environment havoc

Why press freedom should be at the top of everyone’s agenda

Lack of involvement, or lack of opportunities?

How cities can lead the way in bridging the global housing gap

Link between conflict and hunger worldwide, ‘all too persistent and deadly’, says new UN report

Eritrea sanctions lifted amid growing rapprochement with Ethiopia: Security Council

EU: Divided they stand on immigration and Trump hurricanes

How Costa Rica’s environment minister talks to his daughter about climate change

1 million citizens try to create a new EU institution

From cheeseburgers to coral reefs, the science of decision-making can change the world

Chart of the day: The internet has a language diversity problem

Depression is the no. 1 cause of ill health and disability worldwide

Minority governments ‘à la mode’ in Europe but can they last long?

EU citizens disenchanted with Economic and Monetary Union over rising poverty and high unemployment

Women and girls in science – from aspiration to reality

European Junior Enterprise Network – Ready to take the Step Into the Future?

High-tech or ‘high-touch’: UK survey gives clues to the jobs of the future

The EU Commission fails to draw the right conclusions about corruption

Entrepreneurship’s key to success showcased by a serial young entrepreneur

Climate change and health: public health awareness in an international framework

Why are the financial markets shivering again?

Here’s what a Korean boy band can teach us about globalization 4.0

Why your next work meeting should be a ‘walk-and-talk’

Brussels waits for the Germans to arrive

COVID-19: Commission provides guidance on EU passenger rights

Preparing the future today: World Health Organisation and young doctors

How cities around the world are handling COVID-19 – and why we need to measure their preparedness

Threat from petty criminals who turn to terrorism, a growing concern, Security Council hears

A rapid deterioration of the humanitarian situation in the war-torn Yemen

25 years after population conference, women still face challenges to ‘well-being and human rights’, says UN chief

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