The European Commission has announced that the public aid framework adopted by Brussels at the start of the pandemic will come to an end on June 30, except for those measures linked to investment and solvency.
In the midst of a pandemic, in March 2020, the Community Executive took several extraordinary measures, including allowing State Aid that, under normal circumstances, is not allowed.
With the levels of infections falling and a high percentage of vaccinated in the European Union, countries are gradually leaving behind many of the extraordinary measures applied until now. For this reason, Brussels has decided that it will no longer prolong this State aid mechanism. The last time it did was at the end of 2021.
To date, the European Commission has adopted more than 1,300 decisions during the pandemic, and almost 950 measures have been approved with an estimated value of more than three trillion euros, although of this figure only around 730,000 million euros have been spent. .
“The improvement of the economic situation due to the relaxation of restrictions is the main reason why we have decided not to extend the Temporary Framework for State aid in the context of COVID-19 after June 30, 2022”, has explained the Vice President in charge of Competition, Margarethe Vestager.
However, the investment and solvency support measures will be maintained, and will be in force until December 31, 2022 and December 31, 2023, respectively. “These two instruments are, indeed, very important to reactivate the economy and attract private investment”, Vestager defended. At a key moment when a large investment in renewable energies is expected, as well as pending due to the geopolitical crisis derived from the war in Ukraine.
According to the European Commission, the elimination of this framework “will be gradual, progressive and coordinated”, in which “companies will not be suddenly excluded from the necessary aid”. Community legislation already provides for a “flexible” transition, specifically in the case of the conversion and restructuring of debt instruments towards other forms of aid, such as direct subsidies, they can be maintained until June 30, 2023. Always “under strict conditions” for “benefits of those borrowers who are not in a position” to repay the credit, explains the Executive.
Governments may also apply programs for the restructuring of loans, extending their duration or reducing interest, as long as they comply with community regulations.
Likewise, due to the war in Ukraine, Brussels recalls that it has recently adopted a Temporary Crisis Framework so that countries can face the economic consequences of the Russian invasion. A framework, scheduled to be in force until December 31, 2022 (which may be prolonged), pending how energy prices and the economic situation may evolve, right now with skyrocketing inflation.
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