EU regulators expect more member states to provide support to companies hit by the impact of coronavirus in the coming days, Europe’s competition chief told Reuters on Tuesday, March 24, days after clearing billions of euros for such plans in Germany, France, and Portugal.
According to Reuters, Margrethe Vestager said easing the bloc’s strict State aid rules for now was essential to deal with the aftermath of the coronavirus crisis, with many economists forecasting a recession.
“When the health crisis is over, we will have an economic crisis to deal with. And if we were to do that, it’s very, very important that we still have a single market because the single market will allow businesses to bounce back with the volume that comes with the single market,” Vestager said in a phone interview.
Thousands of companies across Europe, in particular small- and medium-sized businesses, have been hit by lockdowns aimed at limiting the spread of the virus, with many facing losses and forced to cut staff.
EU governments in turn have responded with a series of measures, most of which will need to be vetted by Vestager to ensure that no company gets an unfair advantage.
Over the weekend, Vestager approved €3 billion (US$3.2 billion) of State aid for Portugal’s tourism, travel, and restaurant industries, three French measures providing more than €300 billion (US$322.7 billion) of liquidity to companies, and two German subsidised loan schemes.
She said that was likely to be just the start. “We expect the weekend just to be the beginning. We will approve a number of schemes today. I think we have three in the pipeline today and then we have more to come, even for member states where they aren’t that many affected yet,” Vestager said.
Unlike the 2008 banking crisis when scores of banks were bailed out to the tune of billions of euros in return for accepting tough conditions, Vestager said regulators were taking a different approach this time because of the impact on entire economies.
“We have set a very low level of remuneration. As you can see on the numbers, they do not suggest that this is a very granular scientific approach,” she said, adding that her team was able to decide on cases within 25 to 48 hours.
The easier rules, which will run until the end of the year, allow State aid only to companies that ran into virus-related difficulties after January 1.
Full Content: Reuters
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