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European Commission’s steps to fight coronavirus repercussions

Below we summarise certain steps adopted by the European Commission to fight the spread of COVID-19, primarily focusing on providing economic (material) assistance and loosening some regulations.

Loosening of state aid rules

On 19 March 2020, the European Commission adopted a temporary framework to enable member states to use the full flexibility foreseen under state aid rules to support the economy in the context of the COVID-19 outbreak. This framework is based on Article 107(3)(b) of the Treaty on the Functioning of the European Union and enables member states to ensure that sufficient liquidity remains available to businesses of all types and to preserve the continuity of economic activity, while limiting negative consequences to the level playing field in the European Single Market.

The temporary framework enables member states to:

  • set up schemes to grant up to EUR 800,000 to a company to address its urgent liquidity needs
  • provide state guarantees to ensure banks keep providing loans to customers
  • grant loans with favourable interest rates to companies
  • use banks' existing lending capacities as a channel for support to businesses – in particular to small and medium-sized companies (the framework makes clear that such aid is considered direct aid to the banks' customers, not to the banks themselves )
  • introduce additional flexibility so that short-term export credit insurance can be provided where needed.

EUR 37 billion to fight the coronavirus

The European Parliament passed the EC’s proposal to release EUR 37 billion to mitigate the pandemic’s economic aftermath. These involve unused funds from structural funds that will be put into a new investment fund available for healthcare and other most-affected segments. The Czech Republic will receive almost EUR 1.2 billion from this package.

Temporary closure of EU borders

On 17 March 2020, the European Commission decided to close the outer border of the Schengen area for 30 days, and accepted, with certain limitations, the gradual closure of borders initiated by member states.

Set of rules to screen foreign investment

On 26 March 2020, the European Commission issued guidance for member states on how to screen direct foreign investments from non-EU countries, especially relating to medical research, biotechnology and infrastructure, as these are crucial assets for safety and public order. It is highly desirable that member states adopt restrictive measures towards foreign investors to prevent any take-overs of control over European companies in these sensitive areas.