EU state aid regulations can save companies and jobs

NEWS Published

COMMENT To help Member States preserve companies and jobs during the current coronavirus crisis, the European Commission has rapidly relaxed EU state aid regulations. At the same time, it is important to safeguard equal conditions for both competition and free enterprise, writes competition and state aid expert Stefan Sagebro.

Halvfigur Stefan Sagebro

According to Stefan Sagebro it is important that the new susidies compensate for damage caused by the coronavirus crisis, rather than compensate for general inefficiencies or poor business management.

In record time, the European Commission has created a special regulatory framework to allow Member States rescue measures as a response to coronavirus. European state aid regulations normally impose substantial restrictions on the capacity of countries to support companies in order to safeguard effective competition. However, these have rapidly been relaxed to allow for extensive support in the form of, for example, state guarantees, loans at below-market interest rates, grants and tax cuts.

In addition, the Commission has accelerated the rate at which it processes state aid support cases. Applications from Member State countries to provide support previously took several months, even years, before receiving approval. Now, they are fast tracked, with decisions being made in a few days. All in all, this has been absolutely vital for Member States to have the opportunity to save as many companies and jobs as possible while remaining within EU rules.

Member States have made considerable use of these opportunities to provide support. By 9 April 2020, the Commission has approved a total of 53 national aid measures, citing the corona crisis as the reason. Initially, many of the measures consisted of state credit guarantees aimed at the entire economy.

As the crisis has intensified, the measures used, and the groups targeted, have gradually changed. The measures have become increasingly selective - directed at individual industries that have been hit particularly hard or that normally provide socially important services. In addition, the measures have not only supported the companies' liquidity with loans or guarantees, but have also evolved into pure subsidies to cover the damage that the companies have incurred.

An example is the Danish aid scheme approved by the European Commission on 8 April 2020. Here, state aid is being provided to cover part of the fixed costs in those companies that have experienced a reduction in turnover of at least 40 percent as a result of this crisis.

It seems reasonable that, as the crisis extends over time and increasing numbers of companies approach bankruptcy, measures are being expanded to support companies' balance sheets. This should be aimed at those companies hit hardest by the crisis and that hold the least buffers to be able to manage for months with little or no revenue.

At the same time, these special and temporary regulations play an crucial role. It is important that the new subsidies compensate for damage caused by the coronavirus crisis, rather than compensate for general inefficiencies or poor business management. If all Member States don’t apply the same rules for aid, while also using existing regulations, there is an obvious risk that this will distort competition between companies from different countries. There is also a risk that the difference will increase not least between those countries that have resources and those who do not - namely large and small Member States.

This week, the Commission is expected to decide on further measures to support companies in the wake of the crisis. State aid regulations will expand allowing Member States to recapitalise individual companies that are in crisis by taking the state as a partner. In the new regulatory framework, the Commission proposes a number of conditions and criteria that will address the risks of major distortions to competition that may follow. Yet perhaps the greatest risks and problems lie with the fact that the increased opportunities to provide support are long-term ones. Increased state ownership in large European companies will not promote the free enterprise needed to drive a strong economic recovery in Europe post-crisis.

Swedish Enterprise is the voice of business in Sweden. We collaborate with 49 employers and industry organisations, providing the joint voice for 60,000 companies with almost 2 million employees. Our role is to speak for all companies and industries, including those that are yet to exist but that may emerge given the right conditions. A better business climate for a better Sweden. That is our mission.

News

NEWS Published:

EU-proposal detrimental to the Swedish labour market model

EU The European Commission is preparing a proposal which will provide a reference framework for the establishment of a decent minimum wage at European level. Sweden is firmly opposed. Johan Danielsson (S) one of the Swedish members of the European Parliament who is monitoring this issue carefully.
NEWS Published:

Shared Nordic view of proposed European Climate Law

EU A key part of the Green Deal is the European Climate Law. At a webinar on 30 June, the four major Nordic organisations for private sector employers presented a new joint position paper: The Climate Law post Covid-19 – the role of industry and business in reaching the objectives of climate action and economic recovery.
NEWS Published:

GDPR: More support for companies but no legislative changes

COMMENT Every four years, the European Commission evaluates the Data Protection Regulation (GDPR). The first report states that Europe needs the acquis to be applied uniformly. This will help smaller companies and facilitate international data exchange.
NEWS Published:

"The legislative proposal sets out what pace the EU should adopt in its climate work"

EU In March, the European Commission published its proposal for a new European climate law. Therefore we asked the Swedish MEP Jytte Guteland (S, S&D) some questions.
NEWS Published:

"Other countries can not take advantage of our ambitious climate work"

EU In March, the European Commission published its proposal for a new European climate law. Therefore we asked the Swedish MEP Jessica Polfjärd (M, EPP) some questions.
NEWS Published:

Swedish Enterprise is contributing to EU:s data strategy

COMMENT Work is currently underway on the EU's data strategy, looking at how best to utilise data within the internal market. Swedish Enterprise is contributing to this work, among other things, by highlighting the needs and desires of the business sector, and has recently responded to a consultation on the EU Commission's ongoing work, writes Carola Ekblad, Digital policy.
NEWS Published:

An ambitious circular economy action plan from the European Commission

COMMENT In recent years, the European Commission has focused heavily on the circular economy in achieving climate neutrality by 2050. The Swedish business community wants to take a driving role in development and to contribute constructively to the work, writes Jenny Svärd.
NEWS Published:

"The Green Deal steer the economy towards a sustainable society"

EU The Swedish MEP Fredrik Federley gives his view on the recovery programme proposed by the European Commission.
NEWS Published:

A recovery plan for Europe after COVID-19

EU If companies are to be able to emerge from the crisis and continue to grow, we need to see an ambitious and coordinated recovery plan for the EU as early as possible, write Anna Stellinger, Deputy Director General, and Anders Edholm, Head of EU-office.
NEWS Published:

Necessary actions to mitigate the Corona crisis

TRADE Swedish Enterprise has sent a position paper to EU-commissioners, Members of the European parliament and several others in order to bring the attention to the list of proposals you can find below.
NEWS Published:

EU state aid regulations can save companies and jobs

COMMENT To help Member States preserve companies and jobs during the current coronavirus crisis, the European Commission has rapidly relaxed EU state aid regulations. At the same time, it is important to safeguard equal conditions for both competition and free enterprise, writes competition and state aid expert Stefan Sagebro.
NEWS Published:

Coronavirus crisis: Seven trade actions that need to be taken now

COMMENT The coronavirus outbreak is placing unprecedented pressure on the EU and international trade. The goal should be to lay the foundations for the best possible conditions post-Corona that keeps as many companies – and jobs – viable. We have no time to wait, writes Anna Stellinger, Deputy Director General Confederation of Swedish Enterprise
NEWS Published:

Information on coronavirus / COVID-19 for you as a business owner

CORONA (UPDATED REGULARLY) Due to the recent developments in the spread of the coronavirus, we have summarised the sources where you, as a business owner/operator entrepreneur, can find the latest information.
NEWS Published:

In times of crisis, barriers are not the answer

COMMENT EU must now take powerful measures in the field of trade policy. A constructive measure would be to completely remove import duties on necessary medical equipment, hand soap and disinfectants, imported from third countries, writes Anna Stellinger, Deputy Director General International and EU Affairs.
NEWS Published:

EU industrial strategy: "Now the real work will begin"

COMMENT The European Commission has presented an industrial strategy. This will lay out the course for the coming five years. The strategy presented today is simply the starting point. Now the real work will begin, says Göran Grén, Director Head of Business Policy and Law Division at the Confederation of Swedish Enterprise.
NEWS Published:

"Most important a trade agreement with the UK"

FREE TRADE How should the EU relate to major powers such as the US and China? How does the EU best approach the defence of free trade and an open and a favourable investment climate? To find what our Swedish MEPs in the Trade Committee think, we asked Jörgen Warborn (M, EPP) a few questions.
NEWS Published:

"The US and China are blending trade policy with geopolitical goals"

FREE TRADE How should the EU relate to major powers such as the US and China? How does the EU best approach the defence of free trade and an open and a favourable investment climate? To find what our Swedish MEPs in the Trade Committee think, we asked Karin Karlsbro, L, Renew Europe.
NEWS Published:

This is how to shape Europe's digital future

COMMENT The European Commission is launching its strategy for Europe's digital future. “The debate on the surveillance society, the mapping of citizens and the profiling of consumers is an important consideration as we move into this future, writes lawyer Carolina Brånby.
NEWS Published:

A Competitive European Industry

EU The European Commission will present its industrial strategy on 10 March. In response to this, Swedish Enterprise has produced the position paper, "A Competitive European Industry". This summarises the organisation's views on a range of issues.
NEWS Published:

11 exciting climate projects from Sweden

Swedish companies have long been at the forefront of combining sustainability and environmental ambitions with growth and innovation. From fossil-free steel to CO2 capture, Sweden’s businesses are leveraging tomorrow's technology for a greener world. As innovation and climate-smart solutions become an increasingly important element in our competitiveness, we have listed 11 ground-breaking climate projects currently underway in Sweden’s business world.