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EU wants to extend looser COVID-19 state aid rules to mid-2021

Foo Yun Chee
·1-min read
FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels
FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels

By Foo Yun Chee

BRUSSELS (Reuters) - Easier state aid rules allowing EU governments to pump trillions of euros into companies ranging from airlines to tour operators and events organisers may be extended to mid-2021, EU competition chief Margrethe Vestager said on Friday.

The European Commission in March loosened the rules, which are designed to ensure that EU countries do not give an unfair advantage to local businesses, to help firms hit by the coronavirus pandemic.

Vestager to date has cleared almost 3 trillion euros of state aid, with Germany accounting for 54% of the amount and France and Italy 14%.

"The effects of the crisis will stay with us for a while. That's why we are proposing to prolong the Temporary Framework until mid-next year and adjust it to continued needs of businesses, while protecting the EU's Single Market," Vestager said in a statement.

Vestager proposed extending the looser regime to June 30, to allow countries to contribute to the fixed costs of companies that are not covered by their revenues, and to allow governments that have acquired stakes in virus-hit companies to exit from the firms through an independent valuation.

The EU executive will now seek feedback from the 27 EU countries before deciding.

(Reporting by Foo Yun Chee; Editing by Alex Richardson)