European Commission approves £50 billion UK “umbrella” scheme under the State aid in order to support the economy during the outbreak of COVID-19
The EC (European Commission) has approved an “umbrella” UK scheme with the aim to support small and medium-sized enterprises (SMEs), as well as large corporates in the United Kingdom that have been affected by the coronavirus outbreak. The estimated budget of the “umbrella” scheme is of £50 billion (approximately €57 billion), and has been approved under the State aid Temporary Framework that has been adopted by the Commission on the 19th of March 2020, and amended on April 3rd 2020.
The UK support measure allows for the provision of aid in the form of:
– Direct grants, equity injections, selective tax advantages and advance payments;
– State guarantees for loans subject to safeguards for banks to channel State aid to the real economy;
– Subsidised public loans to companies with favourable interest rates;
– Support for coronavirus related research and development (R&D);
– Support for the construction and upscaling of testing facilities to develop and test products useful to tackle the coronavirus outbreak;
– Support for the production of products relevant to tackle the coronavirus outbreak.
The measure applies to the whole territory of the United Kingdom and is targeted at SMEs and large corporates. Aid can be granted by UK authorities at all levels, either directly or indirectly, in case that it concerns guarantees on loans, through credit institutions and other financial institutions as financial intermediaries. Aid can only be granted until the end of this year.
The Commission concluded that these measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the United Kingdom, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the EC approved the measure under EU State aid rules. 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.
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