By 13 March 2020, the EC was due to provide new guidance on relaxing state aid rules and budgetary rules.
Under normal circumstances, such state aid is not allowed and its possible use is subject to strict rules. The EC therefore allows support from public money to compensate for the damage companies suffer due to the coronavirus. The EC authorises such aid on the basis of Article 107 2b TFEU, i.e. in an emergency situation (coronavirus).
The European Commission is currently preparing three initiatives:
- state aid under relaxed rules;
- the use of tools within the “loosening” of the Stability and Growth Package;
- an initiative: “Corona Response Investment Initiative” targeting:
- health systems,
- labour markets,
- and other vulnerable parts of our economy.
What budget does the EC have for the Corona Response Investment Initiative?
The EC is expected to raise around €25 billion in the short term. This week the EC was due to make a proposal to the Council and Parliament to release €7.5 billion of investment liquidity. The EC will set up a task force to work with member states to ensure that these funds start flowing in the coming weeks.
The European Council intends to take the necessary decisions on the matter at its summit on 26-27 March.
How will the Corona Response Investment Initiative work?
EU countries (including Poland) will not have to return unused money from structural and investment funds to the EC. They will be able to reinvest them in the form of national co-financing to receive further tranches of EU funds. The main regulation on EU funds and national fund programmes targeting, among others, SMEs will be amended to the necessary extent.
What does this mean?
In order to swiftly channel €25 billion of European public investment into fighting the aftermath of the coronavirus crisis, the Commission will propose this year to waive the obligation to request reimbursement of unused advances for European structural and investment funds currently held by Member States.
Member States will be obliged to use these sums to accelerate their investments under the Structural Funds. They will use them for national co-financing that they would normally have to provide themselves in order to receive further tranches of their Structural Fund envelopes.
This proposal can be implemented by amending the regulation on common provisions for the Structural Funds. The Commission was due to present this proposal to the Council and Parliament this week. The national operational programmes would then be adjusted, if necessary, in order to channel funds to the areas indicated above.
At around 17:00 on Friday (13.03.2020), the Commission increased the amount and confirmed that it will allocate around €37 billion for the Corona Response Investment Initiative.