EU greenlights more state aid for virus-hit firms and agriculture

The European Union has decided to extend its looser competition rules and provide more state aid for firms adversely affected by COVID-19.

29 January 2021

2 minute read

Reuters reports that EU competition regulators on 28 January extended looser state aid rules for virus-hit companies to the end of 2021, making it easier for EU governments to pump money into economies battered by the pandemic.

The European Commission eased the rules in March last year and has since faced calls from several EU countries to continue doing so while the virus continues to wreak havoc.

"As the coronavirus outbreak persists longer than we were all hoping for, we need to keep making sure that member states can provide businesses with the necessary support to see it through," European Competition Commissioner Margrethe Vestager said in a statement.

She also more than doubled the amount of aid allowed to be granted to companies in the agricultural and fishery sectors, to €225,000 for the former and to €270,000 for the later. Other sectors can get aid up to €1.8 million, up from €800,000.

Governments can also contribute up to €10 million, up from €3 million, to the fixed costs of companies that are not covered by their revenues and where turnover losses are at least 30 percent compared to 2019 figures.

They will also be able to convert guarantees, loans and repayable advances into direct grants until the end of 2022 in a move aimed at encouraging EU countries to use repayable instruments as aid.

The Commission also extended to the end of 2021 the temporary removal of all countries from the list of “marketable risk” countries under its short-term export-credit insurance guidance because of the continued lack of sufficient private capacity to cover export risks.