EU Relaxes State Aid Rules As COVID-19 Crisis Drags On

People shop at the outdoor market and walk about in central Rome on May 9, 2020, during the country’s partial lockdown aimed at curbing the spread of the COVID-19 infection, caused by the novel coronavirus. Tiziana FABI / AFP.

The EU on Thursday extended until the end of this year the easing of European state aid rules and gave governments freer rein to salvage firms struck down by the pandemic.

The extension comes as the coronavirus pandemic drags on, with the European economy not expected to enter a recovery before later in the year as a vaccine rollout stumbles.

The European Commission, the EU’s executive arm, said it will lift the state aid rules until December 31, prolonging the previous deadline by six months.

“We need to keep making sure that member states can provide businesses with the necessary support to see it through,” EU competition chief Margrethe Vestager said in a statement.

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In its decision, the commission further increased certain ceilings on loans and subsidies for companies and also allowed for emergency loans to be changed into subsidies.

The EU said that if a company’s turnover was badly reduced in the crisis, the state aid could contribute to fixed costs by up to 10 million euros, more than the three million euros previously.

Under normal circumstances, such aid is granted only in small amounts and in very specific cases to ensure fair competition and to avoid bailing out failing companies.

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