COVID-19: European State Aids to Tackle the Economic Impacts

06-04-2020

 

The novel coronavirus (COVID-19) pandemic is affecting hundreds of thousands of people and has resulted, all over the world, in strict health and safety measures. Such measures have led the majority of companies to suspend or significantly limit their activities, with a strong economic impact on both businesses and workers.

Accordingly, the European Commission has enabled EU States to adopt social and fiscal measures to limit economic damage as much as possible. For the moment, there exist five types of State aid that can be granted under specific conditions: direct grants, repayable advances or tax advantages; guarantees on loans; subsidy interest rates for loans; guarantees and loans channelled through financial institutions, and short-term export credit insurance.

As of 3 April, State Aid Measures have been adopted by almost half of the Member States, including Denmark, Estonia, France, Germany, Ireland, Italy, Latvia, Luxembourg, Malta, Portugal, Sweden and the United Kingdom and represent a mix of the above-mentioned instruments.

For instance, Germany is aiming to help its businesses through:

  • a loan programme covering up to 90% of the risk for loans for companies of all sizes, covered by the Kreditanstalt für Wiederaufbau (KfW) as well as other regional authorities and promotional banks. Eligible loans may have a maturity of up to five years and can reach €1 billion per company, depending on the company's liquidity needs
  • a loan programme in which the KfW, other regional authorities and promotional banks participate together with private banks to provide larger loans as a consortium. For this scheme, the risk taken by the State may cover up to 80% of a specific loan but not more than 50% of the total debt of a company
  • an additional scheme, under the form of direct grants, repayable advance or tax and payment advantages, granting up to €120,000 per company active in the fishery and aquaculture sector and up to €100,000 per company active in the primary production of agricultural products. For all other companies affected by the coronavirus outbreak, aid does not exceed €800,000 per company

Additionally, the German Government is planning to support 2.35 million workers by investing 10 billion euros on a programme for citizens who become unemployed due to the crisis.

Further measures are expected to be introduced by EU Member States. amfori’s Advocacy team will keep you updated on related policy news.