UK & Europe
The European Commission has published urgent COVID-19 state aid guidance confirming EU member states can use existing flexibility in the state aid regime to support the private sector.
The European Union state aid regime prohibits state financial assistance to industry unless it is made in accordance with the parameters of the rules. There are controls over the types of industry that can be offered different types of public funding. The EU state aid regime continues to apply to the United Kingdom during the implementation phase of Brexit.
The European Commission has just (13 March 2020) published urgent COVID-19 state aid guidance to EU member states. It confirms that member states are encouraged to use the existing flexibility in the state aid regime to support their economies due to coronavirus.
The options include:
The Commission has given clearance to state aid notifications in record time in a number of cases related to COVID-19. Further guidance on potential Article 107(3)(b) serious disturbance aid is promised by the Commission.
In practice, although the EU state aid rules are often seen as a barrier to state involvement in funding unprofitable industry, there are a wide range of potential tools which the public sector can use to provide emergency funding to business. This is likely to come as welcome news to the very wide range of industries (aviation, hospitality and energy, to name but three) which are being heavily affected by COVID 19. Clyde & Co's global procurement and state aid team helps both public bodies making subsidies, and industries seeking support, achieve their goals in a state aid compliant way.
Please contact David Hansom, Partner or your usual contact at Clyde & Co if your organisation requires any support at this time.