Germany tops in state aid during the crisis

Germany tops in state aid during the crisis
Bandenburg Gate, Berlin, credit: Unsplash/Johannes Krupinski

The German economy has received more than half of the total state aid approved by the European Commission under the temporary framework in the context of the coronavirus outbreak.

According to figures released at today’s virtual press briefing (18 May), the Commission has taken 124 decisions approving 160 national measures notified by 26 Member States and the UK. A Commission spokesperson said that the amount of around €1.95 trillion of total state aid approved so far is a best estimate.

After Germany, with 51 % of the total amount of state aid notified to and approved by the Commission, follow France (17 %), Italy (16 %), UK (4 %), Belgium (3 %), and Poland (2.5 %). State aid notified by other member states is estimated to between 0.1% and 1.4% of the total €1.95 trillion estimate.

In fact, the figures can be higher, since for some measures under the temporary framework it is not necessary to indicate a budget. Furthermore, some Member States have notified preliminary budgets to the Commission that may be increased.

To support the economy in the context of the coronavirus outbreak, the Commission adopted a temporary framework which enables Member States to use the full flexibility foreseen under state aid rules. The temporary framework provides for different types of aid to companies, which can be granted by member states.

According to the Commission, all state aid approved has been necessary and proportionate to support businesses and remedy the serious disturbance to the European economy due to the coronavirus outbreak. The Commission is assessing all notifications under the EU treaty which enables it to approve state aid measures implemented by Member States to remedy a serious disturbance in their economy.

The Commission is aware of the huge differences in the amount of state aid granted by Member States and links it to the fiscal space they have as well as the respective size of their economies. The temporary framework is applicable to all Member States and they may benefit indirectly from aid given in another country because of common supply chains.

In her speech last week (13 May) to the European Parliament on the recovery plan, European Commission President Ursula von der Leyen admitted that the use of state aid is very different. “What we start to observe now is an unlevelling of the playing field in our Single Market,” she said and promised to “support those that need it the most”.

The temporary framework will be in place until the end of December 2020 and allows measures that normally would be considered as distorting competition. Examples of measures are direct grants, state guarantees for loans, subsidised public loans, public short-term export credit insurance, and targeted support in the form of deferral of tax payments or wage subsidies for employees.

M. Apelblat

The Brussels Times

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