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IP/08/1993

Brussels, 17 December 2008

State aid: Commission adopts temporary framework for Member States to tackle effects of credit squeeze on real economy

The European Commission has adopted, under EC Treaty state aid rules, a temporary framework providing Member States with additional possibilities to tackle the effects of the credit squeeze on the real economy. The Framework forms part of the measures announced by the Commission in its 26th November European Economic Recovery Plan (see IP/08/1771) and was approved in record time following consultation with Member States. Due to the drying up of the lending market, even healthy companies may not be able to get the finance they need. This may seriously endanger their business. The new framework therefore introduces a number of temporary measures to allow Member States to address the exceptional difficulties of companies to obtain finance. In particular, Member States will be able to grant without notification of individual cases subsidised loans, loan guarantees at a reduced premium, risk capital for SMEs and direct aids of up to €500,000. All measures are limited until the end of 2010 and subject to conditions. Based on Member States' reports, the Commission will evaluate whether the measures should be maintained beyond 2010, depending on whether the crisis continues.

Competition Commissioner Neelie Kroes said: "We must fight the crisis, not each other. State aid must be targeted at allowing companies, especially SMEs, to overcome financial problems arising from the current credit squeeze without worsening the situation for other companies, thereby aggravating the crisis. Together with the existing possibilities to support smart investment in sustainable growth, the new measures will give new opportunities to Member States to bring the economy back on the right track."

The Framework will facilitate the tackling of the current difficulties in the economy First, to ensure sufficient bank lending to companies; second, to allow companies with liquidity problems due to the crisis to benefit from temporary relief through a limited grant; and third, to encourage companies to continue investing into a sustainable future, including the development of green products.

In order to meet these objectives, Member States may grant, under certain conditions and until the end of 2010 e.g.:

  • a lump sum of aid up to €500,000 per company for the next two years, to relieve them from current difficulties
  • state guarantees for loans at a reduced premium
  • subsidised loans, in particular for the production of green products (meeting environmental protection standards early or going beyond such standards)
  • risk capital aid up to € 2.5 million per SME per year (instead of the current €1.5 million) in cases where at least 30% (instead of the current 50%) of the investment cost comes from private investors.

The Commission expects the financial markets, and hence the provision of lending to businesses, to get back to normal in the foreseeable future. Therefore, the new measures addressing the exceptional circumstances in the financial markets are limited in time and expire at the end of 2010.

Member States will have to notify schemes to the Commission that fully comply with the above-mentioned types of aid. As it has done since the beginning of the crisis, the Commission will act quickly provided Member States cooperate fully, provide adequate information and follow the rules. Once schemes are approved, aid given to individual companies will not have to be notified.

The Framework is available on the Commission's Europa website at:

http://ec.europa.eu/competition/state_aid/legislation/horizontal.html

Background

Over the last couple of years, the Commission has thoroughly reformed its state aid rules. As a result, Member States now have a set of up-to-date rules for granting horizontal aid to stimulate e.g. research, innovation, environmental protection and regional development. See MEMO/08/659 and MEMO/08/660 for more details.

See also MEMO/08/795.


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