EU allocates €35 billion in state aid

The European Commission made several announcements in July, giving details of almost €35 billion in financial aid to member states.

Four member states will share €7.5 billion in funding under the Temporary Crisis Framework (EU 2022/C 131 I/01 – measures to support the economy following the aggression against Ukraine by Russia).

• €20.2 million (CZK 500 million) is allocated to a Czech Republic scheme to support primary agricultural producers, hit particularly hard by the price rises for electricity, animal feed, and fuel due to the war in Ukraine. Open to small and medium-sized companies, those eligible will receive direct grants, including reductions of principal operating loans granted to primary producers of up to 50% of the unpaid amount (maximum €10,000/CZK 250,000)

• €526.5 million is allocated to supporting Italy’s road haulage sector, providing liquidity support in the face of fuel price rises due to the war in Ukraine, and aims to mitigate insolvency and keep goods flowing. The scheme will be open to road haulage operators of all sizes, and beneficiaries will receive aid in the form of tax credits for the purchase of diesel and AdBlue fuels for road haulage vehicles with a total mass of 7.5 tonnes or more, and in a Euro 5 category or higher. (Maximum aid of €400,000 per company, granted no later than 31 December 2022.)

• €2 billion has been awarded to a Finnish loan and guarantee scheme to support SMEs and large companies ‘in the context of Russia’s invasion of Ukraine’. Aid will take the form of loans with subsidised rates and guarantees on loans granted by Finnvera Plc – Finland’s state-owned specialised financing company. Open to firms across all sectors affected by the war in Ukraine, except; primary producers of agricultural products and forestry (already supported by aid granted in May 2022); construction businesses also acting as property developers; and financial institutions. Loans will not exceed six years and will be granted by 31 December 2022.

• €5 billion is allocated to supporting energy and trade intensive companies in Germany’s industrial sector. The aid will take the form of direct grants for additional costs incurred due to drastic increases in the price of natural gas and electricity due to the war in Ukraine. The aid will be open to energy and trade intensive companies across all industrial sectors that are at risk of carbon leakage, as per Annex I of the Guidelines on State aid for climate, environmental protection and energy. The eligible period is from February to September 2022 and the grants will be advance payments, with the final amount to be verified and corrected by 30 June 2023.

Meanwhile, Portugal has been awarded €23 billion under the Partnership Agreement between Portugal and the European Commission. These funds are intended to ‘support the economic, social and territorial cohesion in Portugal’ until 2027.

The total €23 billion in aid is broken down as follows:

• €11.5 billion for the European Regional and Development Fund (ERDF) to boost competitiveness of the Portuguese regions. Under the plan, €5.3 billion is aimed at strengthening the country’s research and innovation ecosystem, digitalising SMEs, installing fast broadband across the country, and modernising local and regional administration through digitalisation.

• €5.5 billion to implement the European Green Deal, aiming to develop a ‘circular and sustainable economy and an environmentally friendly transport system’, and preserving biodiversity.

• €224 million for the Just Transition Fund (JTF) to help lessen the negative social and economic impacts of climate transition for Portuguese territories, by helping economies diversify, create new employment opportunities and develop skills.

• €7.8 billion invested by the European Social Fund plus (ESF+) to improve access to the labour market by upskilling, re-skilling, vocational training, career guidance and quality education. These funds will also be used in the fight against poverty and social exclusion.

• More than €1.9 billion is allocated to the outermost regions, Açores and Madeira, aiming to improve island connectivity, transport services, transport infrastructure and improve access to healthcare, education and social services.

• Finally, around €400 million is aimed at ecological transition for the fishing / aquaculture sectors and ‘the blue economy’ – helping improve; sustainability, small-scale coastal fishing, sector resilience, and boost innovative solutions.

Estonia has also been granted €3.5 billion for economic development, social development, green transition and territorial cohesion under ESF+. Funds are allocated to various projects including digitalisation, education and upskilling, innovation and competitiveness, rail transport for CO2 reduction, the road network, energy efficiency for business, renewable energies and the use of recycled materials.

Finally, €433 million has been allocated to support Ukrainian refugees in Belgium, Italy and Luxembourg under REACT-EU, aimed at the employment and healthcare sectors of these countries. REACT-EU has also given €496 million to Germany, Slovakia and Finland, a percentage of which is intended to support Ukrainian refugees in those countries.