The European Commission has approved a series of multi-billion-euro state support packages for Greece, Poland and Portugal to help soften the economic impact of the coronavirus through grants and loan guarantees.
The Commission, which enforces EU anti-trust regulation, loosened its rules last month to allow EU governments to support businesses and banks after factories began to fall quiet and Europeans were ordered to stay home to stop the virus spreading.
In a series of statements late on Friday and on Saturday, the Commission approved a €13 billion state aid programme for the Portuguese economy, a €22 billion plan of state guarantees for Poland and a €2 billion scheme for Greece.
The schemes were judged not to distort EU competition.
“This Polish guarantee scheme will help Polish businesses affected by the current coronavirus crisis cover their immediate working capital and investment needs,” Commission Executive Vice-President Margrethe Vestager said in a statement.
For Portugal, Vestager said the €13 billion would “enable Portugal to provide direct grants and public guarantees on loans to help small-and-medium-sized companies and large companies cover investment and working capital needs”.
The Greek scheme allows for state guarantees on working capital loans, Vestager said.
On Thursday, the Commission approved a €9.1 billion Swedish guarantee scheme to support the economy in the coronavirus outbreak.
Germany, France, Italy, the UK, the Netherlands and many others have also obtained clearance from EU competition authorities to support their economies during the crisis (full list here).
By mid march, Euro area countries had mobilised around 1% of their GDP (€120 billion) to fighting the economic fallout from the coronavirus. But the total amount could quickly exceed those sums as the crisis unfolds.
European solidarity mechanisms are also being considered to support EU economies during the coronavirus outbreak, although disagreements persist over the strings attached to EU assistance.
The eurozone’s rescue fund could offer up to €240 billion to help member countries hit badly by the coronavirus outbreak, said Mario Centeno, the Portuguese finance minister who heads the eurogroup.
In an interview with several European newspapers published Saturday (4 April), Centeno said any credit line should be designed to help, not make matters worse for those states needing aid.
This was an apparent reference to the ESM’s normal rules which include often tough austerity conditions attached to its loans.
“There would be no sense in linking a pandemic crisis to a programme of (say) privatisation or reform of the labour market,” Centeno told French daily Le Figaro ahead of a videoconference of eurozone finance ministers on Tuesday.
He conceded that there would be some “form of conditionality… but the ESM is ready to dissociate its credit lines from the logic of the sovereign debt crisis.”
Meanwhile, Thierry Breton, the EU’s internal market commissioner, called on EU countries over the weekend to invest “around 10% of their GDP” to relaunch the economy after the pandemic.
“In total, it could reach €1.6 trillion,” he told Le Parisien newspaper on Sunday (5 April).