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Brussels, 19 th February 2009

State aid: Commission authorises temporary German scheme allowing reduced interest rates to boost economy

The European Commission has authorised under EC Treaty rules on state aid a German scheme aimed at providing relief to companies encountering financing difficulties as a result of the credit squeeze in the current economic crisis. The scheme allows authorities at federal, regional and local level, including public development banks, to grant aid in the form of reduced interest rates on loans concluded by 31 December 2010. The scheme meets the conditions of the Commission’s Temporary Framework for state aid measures to support access to finance in the current financial and economic crisis (see IP/08/1993), because it is limited in time, respects the relevant thresholds and applies only to companies that were not in difficulty on 1 July 2008. It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a Member State.

Competition Commissioner Neelie Kroes said "The measure offers a significant reduction in the cost of loans, which is an effective way of encouraging business investment and economic recovery, without unduly distorting competition."

The German authorities designed the scheme on the basis of the rules laid down in the Commission's Temporary Framework on state aid to the real economy during the crisis (see IP/08/1993) and in particular the conditions for aid in the form of subsidised interest rates. The low rates will be available for loans contracted no later than 31 December 2010, but only on interest payments up to 31 December 2012. After that date firms will have to pay market rates. The scheme does not apply to firms that were already in difficulty on 1 July 2008 (i.e. before the credit crunch).

The scheme is the fourth German measure authorised under the Temporary Framework: it follows a €15 billion German loan programme ("KFW-Sonderprogramm 2009") and a framework scheme ("Bundesregelung Kleinbeihilfen") allowing to provide aid of up to €500 000 per undertaking to firms in need (for both see IP/08/2063).

The decision will be published in the State Aid Register on DG Competition’s website, under the reference number N 38/2009. The latest decisions on state aid published in the Official Journal and on the website are listed in the electronic newsletter State aid Weekly e-News .

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