COVID-19 State Aid - The EU opens the door to additional support

(Byrne Wallace, Dublin, 3 February 2021) The European Commission has broadened the scope of its COVID-19 State aid Temporary Framework Communication by more than doubling the level of support that Member States can provide to many individual businesses suffering as a result of COVID-19. It has also extended the period of validity for the Temporary Framework by a further 6 months to the end of December 2021.This is the fifth (and almost certainly the most significant) amendment to the Temporary Framework since it was introduced by the Commission in spring 2020 in response to the COVID-19 outbreak. The purpose of the Temporary Framework is to loosen the State aid rules applicable to Member States in light of COVID-19 in providing financial assistance to their economies, by imposing fewer restrictions on the aid amounts and eligible costs that can be provided to businesses. Support can be provided through a number of methods under the Temporary Framework including direct grants, State guarantees, subsidised public loans, safeguards for banks lending to SMEs, and short-term export credit insurance. Every EU Member State has notified at least 4 measures, with a total of over 325 notifications having been made in the less than 10 months the Temporary Framework has existed. Sixty-five of these measures have had budgets of over €1 billion, including three French measures mobilising €300 billion of liquidity support for companies, a £50 billion UK “umbrella” scheme, a €44 billion Italian recapitalisation scheme to support large companies, and a German fund of up to €500 billion of liquidity and capital support.