More flexible EU state aid rules introduced during the COVID pandemic to end in phases
On 12 May 2022, the European Commission decided that the more flexible state aid rules that were introduced to mitigate the economic effects of the coronavirus pandemic would largely end on 30 June 2022. The decision was based on the Commission’s assessment that the coronavirus pandemic no longer has a negative impact on the EU economy. However, the measures under the temporary state aid rules to support the recovery of the EU will remain in force until the end of 2022 and 2023.
The temporary state aid rules have aimed to give the Member States a wide range of tools to support companies and to mitigate the adverse economic effects of the coronavirus pandemic. Extensive vaccine coverage, a manageable number of coronavirus infections and the lifting of restrictive measures have led to an improved economic situation in the EU, and consequently, there are no longer grounds for extending the more flexible rules, in the Commission’s view. However, the Commission will monitor the pandemic situation and, if necessary, take new measures.
Some flexibility to remain even after June 2022
After June 2022, loans issued under the temporary rules can still be converted into grants under certain conditions, but new support can no longer be granted, as a rule.
Support for the EU’s recovery from the coronavirus pandemic is an exception. Rules allowing small-scale investment support will remain in force until 31 December 2022 and solvency support for companies until 31 December 2023. These support measures require a notification of state aid to the Commission, and a prior approval by the Commission.
Even after the end of the more flexible rules, companies may receive compensation for damages caused by the coronavirus restrictions. Before such compensation can be granted, Member States are required to issue a notification of state aid to the Commission.
Temporary rules used in Finland’s coronavirus support policy
On 19 March 2020, the Commission approved the temporary state aid rules, which were initially in force until the end of 2020. After that, the scope of application or the validity of the rules has been extended six times.
Under the temporary rules, the Commission has made more than 1,300 decisions on over 900 support measures. In total, the Member States granted approximately EUR 730 billion in aid between March 2020 and 30 June 2021. During that period, Finland has granted around EUR 3.2 billion in aid under the temporary rules to companies in the industrial and services sector. The nominal value of loans and guarantees are included in these amounts.
The more flexible state aid rules have played a key role in Finland’s coronavirus support policy and the management of the pandemic’s economic impacts. Finland has used the rules as the EU legal basis for business cost support, closure compensation and the guarantee scheme for shipping companies that are critical to the security of supply. The rules have also made it possible to grant individual support to Finnair and Finavia, for example.
Own set of rules for mitigation of effects caused by Russia’s war of aggression
In March 2022, the Commission introduced more flexible state aid rules so that Member States can grant aid to companies to mitigate the adverse economic impacts of Russia’s war of aggression. Among other things, the rules allow the granting of loans, grants and guarantees to secure the liquidity of companies as well as support for compensating for the exceptionally high electricity and gas prices. So far, Finland has decided to make use of these new rules in the cost support for the transport sector. The invasion started by Russia is therefore not a justification for continuing the state aid policy introduced for the coronavirus pandemic, as more flexible rules have been implemented for that purpose separately.
Olli Hyvärinen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +258 29 504 7026