Temporary framework
Temporary framework in response to the financial crisis
The Commission introduced a Temporary framework for state aid measures to help address the financial and economic crisis in December 2008. This gave EU Member States greater flexibility to intervene in the market to provide support to financial institutions and other companies in the real economy affected by the crisis until the end of December 2010.
The UK put several framework schemes in place that enable public authorities to take advantage of the greater temporary flexibility afforded by the Framework.
December 2010 – Commission announces continuation of the temporary framework measures for the real economy
In December 2010, EU Competition Commissioner Joaquin Almunia announced the Continuation of both the Banking and real economy Temporary State Aid Frameworks - with amended conditions.. The UK had called for the real economy aid measures to come to an end. The Commission have been under pressure to extend the Framework beyond 2010 because of the continued effects of the crisis in some Member States.
The new framework is tougher, particularly for larger companies, and crucially the worst abuse (allowing failing companies to stay in the market without consequence), has been addressed. The extension is unlikely to make much practical difference to the UK.
As of January 2011, the temporary framework allows Member States to grant:
- aid in the form of loan guarantees
- aid in the form of subsidised interest rates
- aid in the form of an interest-rate reduction for investment loans related to products which significantly improve environmental protection
Compatible Limited Amount of Aid
The provision to provide a Compatible Limited Amount of Aid up to €500,000 per company is not included in the revised Temporary Framework. The new Framework provides a small concession which allows authorities to grant this type of aid in 2011 provided the application was submitted by 31/12/2010. The European Commission has approved the UK application to use this facility.
Prolongation of UK framework “small amounts of compatible aid” Aid SA 32110 (2010/N)
