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The European Commission proposes "SURE": a new temporary support instrument to mitigate the risks of unemployment in an emergency

2020 April 2
  • The Department of Employment and Social Policies of the Basque Government follows in detail the initiative for its development and next application in sub-state areas
  • “Support to mitigate Unemployment Risks in an Emergency - SURE”
  • Designed to help protect jobs and workers affected by the coronavirus pandemic Covid 19
  • Provide financial assistance with concessional loans from the EU to Member States of up to € 100 billion in total

Brussels 2020 04 02

The President of the European Commission, Ursula Von der Leyen, presented this morning in Brussels a proposal for a Regulation on a new temporary support instrument to mitigate the risks of unemployment in an emergency (Support to mitigate Unemployment Risks in an Emergency - SURE by its initials in English). The Department of Employment and Social Policies of the Basque Government follows in detail the initiative for its development and next application in sub-state areas.

Saving lives and supporting livelihoods in these times of acute crisis is paramount. The Commission is further increasing its response by proposing to set up a €100 billion solidarity instrument to help workers keep their incomes and help businesses stay afloat, called SURE. It is also proposing to redirect all available structural funds to the response to the coronavirus.

Farmers and fishermen will also receive support, as will the most deprived. All of these measures are based on the current EU budget and will squeeze out every available euro. They show the need for a strong and flexible long-term EU budget. The Commission will work to ensure that the EU can count on such a strong budget to get back on its feet and progress on the path to recovery.

The coronavirus outbreak is testing Europe in ways that would have been unthinkable only a few weeks ago. The depth and the breadth of this crisis requires a response unprecedented in scale, speed and solidarity.

In the past weeks, the Commission has acted to provide Member States with all the flexibility they need to support financially their health care systems, their businesses and workers. It has acted to coordinate, speed up and reinforce the procurement efforts of medical equipment and has directed research funding to the development of a vaccine. It has worked tirelessly to ensure that goods and cross-border workers can continue to move across the EU, to keep hospitals functioning, factories running and shop shelves stocked. It has and continues to support the repatriation of EU citizens, their families and long-term residents to Europe from across the world.

In doing this, the Commission is acting on its conviction that the only effective solution to the crisis in Europe is one based on cooperation, flexibility and, above all, solidarity.

Commenting on the proposals adopted today, President von der Leyen said: “In this coronavirus crisis, only the strongest of responses will do. We must use every means at our disposal. Every available euro in the EU budget will be redirected to address it, every rule will be eased to enable the funding to flow rapidly and effectively. With a new solidarity instrument, we will mobilize €100 billion to keep people in jobs and businesses running. With this, we are joining forces with Member States to save lives and protect livelihoods. This is European solidarity.”

€100 billion to keep people in jobs and businesses running: the SURE initiative

"We need to cushion the economic blow in order for the EU economy to be ready to restart when the conditions are right. To achieve this, we must keep people in employment and businesses running. All Member States have or will soon have short-time work schemes to help achieve this" said Von der Leyen.

SURE is the Commission's answer to this: a new instrument that will provide up to €100 billion in loans to countries that need it to ensure that workers receive an income and businesses keep their staff. This allows people to continue to pay their rent, bills and food shopping and helps provide much needed stability to the economy.

 

The loans will be based on guarantees provided by Member States and will be directed to where they are most urgently needed. All Member States will be able to make use of this but it will be of particular importance to the hardest-hit.

 

SURE will support short-time work schemes and similar measures to help Member States protect jobs, employees and self-employed against the risk of dismissal and loss of income. Firms will be able to temporarily reduce the hours of employees or suspend work altogether, with income support provided by the State for the hours not worked. The self-employed will receive income replacement for the current emergency.

Delivering for the most deprived – the Fund for European Aid to the Most Deprived

As most of Europe practices social distancing to slow the spread of the virus, it is all the more important that those who rely on others for the most basic of needs are not cut off from help. The Fund for European Aid to the Most Deprived will evolve to meet the challenge: in particular, the use of electronic vouchers to reduce the risk of contamination will be introduced, as well as the possibility of buying protective equipment for those delivering the aid.

Supporting fishermen and farmers

Europe's farming and fisheries have an essential role in providing us with the food we eat. They are hard hit by the crisis, in turn hitting our food supply chains and the local economies that the sector sustains.

As with the structural funds, the use of the European Maritime and Fisheries Fund will be made more flexible. Member States will be able to provide support:     to fishermen for the temporary cessation of fishing activities;     to aquaculture farmers for the temporary suspension or reduction of production and provide support; and to producer organizations for the temporary storage of fishery and aquaculture products.

The Commission will also shortly propose a range of measures to ensure that farmers and other beneficiaries can get the support they need from the Common Agricultural Policy, for example by granting more time to introduce applications for support and more time to allow administrations to process them, increasing advances for direct payments and rural development payments, and offering additional flexibility for on-the-spot checks to minimise the need for physical contact and reduce administrative burden.

Protecting our economy and people with all available means

Redirecting all Cohesion Policy funds to fight the emergency. All uncommitted money from the three Cohesion Policy funds – the European Regional Development Fund, the European Social Fund and the Cohesion Fund - will be mobilised to address the effects of the public health crisis.

To make sure that funds can be re-directed to where they are most urgently needed, transfers between funds as well as between categories of regions and between policy objectives will be made possible. Moreover, co-financing requirements will be abandoned, as Member States are already using all their means to fight the crisis. Administration will be simplified.

The Emergency Support Instrument

The European Union has not faced a health crisis in its history on this scale or spreading at this speed. In response, the first priority is to save lives and to meet the needs of our health care systems and professionals who are working miracles every day right across our Union.

The Commission is working hard to ensure the supply of protective gear and respiratory equipment. Despite the strong production efforts of industry, Member States still face severe shortages of protective gear and respiratory equipment in some areas. They also lack sufficient treatment facilities and would benefit from being able to move patients to areas with more resources and dispatch medical staff to hardest-hit places. Support will also be needed for mass testing, for medical research, deploying new treatments, and for producing, purchasing and distributing vaccines across the EU.

The EU is today proposing to use all available remaining funds from this year's EU budget to help to respond to the needs of European health systems.

€3 billion will be put into the Emergency Support Instrument, of which €300 million will be allocated to RescEU to support the common stockpile of equipment. The first priority would be managing the public health crisis and securing vital equipment and supplies, from ventilators to personal protective gear, from mobile medical teams to medical assistance for the most vulnerable, including those in refugee camps. The second area of focus would be on enabling the scaling up of testing efforts. The proposal would also enable the Commission to procure directly on behalf of the Member States.

As the situation continues to evolve, the Commission will come forward with more proposals and will work with the other EU institutions to move forward as quickly as possible.

State aid: Commission approves Spanish “umbrella” scheme to support economy in coronavirus outbreak

The European Commission has approved a Spanish aid scheme to support the Spanish economy in the context of the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19 March 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Spanish “umbrella” scheme we approved today will support self-employed, SMEs and large companies affected by the coronavirus outbreak through a wide range of public support measures. This includes direct grants, repayable advances, tax and payment advantages, public guarantees on loans and loans at favourable terms. This will help Spanish businesses cover their immediate working capital and investment needs in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, in line with EU rules.”

The Spanish support measure

Following the approval by the Commission of two Spanish guarantee schemes on 24 March, Spain notified to the Commission a new “umbrella” scheme to support companies affected by the coronavirus outbreak under the Temporary Framework.

The scheme approved today consists in a National Temporary Framework for State aidbased on which the Spanish authorities (at national, regional and local level) will be able to grant aid to support companies affected by the coronavirus outbreak.

More specifically, under this “umbrella” scheme, the Spanish authorities will be able to provide liquidity support to self-employed, small and medium-sized entreprises (SMEs) and large companies in the form of direct grants, repayable advances, tax and payment advantages, guarantees on loans and subsidised interest rates for loans.

This scheme aims at supporting companies that face difficulties due to loss of income and liquidity resulting from the economic impact of the coronavirus outbreak. In particular, it will help businesses to cover immediate working capital or investment needs.

The Commission found that the Spanish measure is in line with the conditions set out in the Temporary Framework. In particular:

  •  With respect to direct grants, repayable advances, tax and payment advantages, the support per company will not exceed€800 000 per company as foreseen by the Temporary Framework.

  •  With respect to State guarantees and subsidised interest rates, (i) the loan amount per company and its duration are limited as set out in the Temporary Framework, and (ii) the guarantee fee premiums and interest rates do not exceed the levels foreseen by the Temporary Framework.

    The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

    On this basis, the Commission approved the measure under EU State aid rules.

Background

The Commission has adopted a Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework provides for five types of aid, which can be granted by Member States:

  1. Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.

  2. State guarantees for loans taken by companies from banks: Member States will be able to provide State guarantees to ensure banks keep providing loans to the customers who need them. These state guarantees can cover loans to help businesses cover immediate working capital and investment needs.

  3. Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

  4. Safeguards for banks that channel State aid to the real economy: Some Member States plan to build on banks' existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The Framework makes clear that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.

  5. Short-term export credit insurance: The Framework introduced additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the State where needed. On 27 March, the Commission further expanded on that flexibility: following an urgent public consultation, the Commission decided to amend the Annex to temporarily remove all countries from the list of “marketable risk" under the Short-term export-credit insurance Communication. This will make public short-term export credit insurance more widely available in light of the current crisis linked to the coronavirus outbreak. Following the amendment, State insurers will in principle be able to step in and provide insurance for short-term export-credit risk for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable.” This amendment will be in place until 31 December 2020, with a possibility to review beforehand.

The Temporary Framework enables Member States to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework.

The Temporary Framework also enables Member States to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis aid company up to €200,000 over three fiscal years.

At the same time, Member States have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.

Furthermore, the Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2020. With a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.56851 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

 

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(XI term 2016 - 2020)