EU’s economic measures against the coronavirus crisis
During these times of crisis, the European Commission is coordinating a common European response to the outbreak of coronavirus by establishing a Coronavirus response team to reinforce the public health sectors and mitigate the socio-economic impact of the crisis in the European Union.
Regarding the economic sector, the European Commission has adopted the Coronavirus Response Investment Initiative, which is directed at the health care systems, the SMEs, the labour markets and other vulnerable parts of our economies. In order to quickly direct €25 billion of European public investment, the Commission proposed to relinquish this year its obligation to request refunding of unspent pre-financing for European structural and investment funds currently held by Member States.
Furthermore, the European Commission has adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy The aim is to ensure that businesses have the liquidity to keep operating, or to put a temporary freeze on their activities, if need be, and that support for businesses in one Member State does not undermine the European single market. The Temporary Framework provides for five types of aid. It will enable Member States to:
- set up schemes direct grants (or tax advantages) up to €800,000 to a company give subsidised State guarantees on bank loans
- enable public and private loans with subsidised interest rates
- use banks’ existing lending capacities, and use them as a channel for support to businesses
- introduce additional flexibility to enable short-term export credit insurance to be provided by the State where needed
So far, the European Commission has approved EU State aid schemes to Denmark, France, Italy, Germany, Latvia, Luxembourg, Portugal, Spain, Estonia and the UK.
The European Commission adopted also actions relating to EU’s fiscal rules, by activating the general escape clause which will allow Member States to undertake measures to deal adequately with the crisis, while departing from the budgetary requirements that would normally apply under the European fiscal framework.
Another economic measure is the EU Solidarity Fund which aims to provide financial support to natural emergencies. The Commission proposed to broaden the Solidarity Fund’s scope to add major public health crises. Under the new rules, financial support of up to €800 million will be allocated to deal with the coronavirus crisis.
Finally the European Central Bank launched a €750 billion emergency bond purchase scheme to support the EU economy keeping the financial system liquid.