EU Clashes Over State Aid Distribution

Brussels plans for a further relaxation of its rules on State aid have been caught up in an increasingly hard-fought pan-European debate over whether deeper-pocketed member States are gaining an unfair advantage, reported The Financial Times.

Germany has accounted for half of State aid approved by the European Commission during the coronavirus crisis, prompting calls from less well-off countries such as Spain that government bailouts were skewing the single market. 

“The Germans, Danes, Dutch and Austrians have a lot of money to throw at this,” said one EU official. “It’s part of this risk that the recovery will be asymmetric.”  The Commission has been holding discussions with member States over the details of its temporary coronavirus-related State aid regime, which allows capitals to rush through support to companies crippled by the lockdowns.  

According to the FT, an update from the Commission on tackling injections of equity and hybrid debt by governments is expected to be released as soon as next week. Since coronavirus broke out in the continent, the EU has rushed through measures to cushion the impact of the pandemic on businesses. 

A key moment came at the start of March, when Ursula von der Leyen, the Commission president, promised to inject flexibility into State aid rules restricting governments’ ability to subsidise companies given the “exceptional circumstances” created by the outbreak.

Full Content: Financial Times

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