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European Commission approves Germany's €500 billion COVID-19 State aid scheme raising questions about the 'level playing field'

09 July 2020
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Jonathan Branton, Head of EU Competition at global legal business DWF, has commented on yesterday's approval by the European Commission of a €500 billion German fund. 
The European Commission yesterday announced the approval of a €500 billion German State aid measure, one of the largest ever State aid approvals.

The €0.5 trillion measure allows the German Government to provide State aid to businesses in the form of State guarantees, subsidised debt instruments in the form of subordinated loans, and recapitalisation aid. The legal basis for the approval is the EU Temporary Framework, a series of State aid law relaxations introduced as a result of the economic issues arising from the Covid-19 pandemic. 

Jonathan Branton of DWF commented:

"Germany has one of the strongest economies in the World and the willingness of its Government to consistently invest large amounts of public funding in its businesses has long been noticeable. Germany has long been at the top of European Commission tables for amounts of State aid awarded per EU Member State, and is very near the top as a proportion of GDP even when taking into account its larger size.

"€500 billion is a lot of money and although the European Commission has not published a table of approvals by Member State, it is widely accepted that the budget value of State aid which has been approved for Germany during the Covid-19 pandemic exceeds that approved for all the other EU countries and the UK.  

"At a time when the EU is expressing fears as to the UK's potential for distorting competition in future by use of State aid, this is perhaps noteworthy.  

"Of course, comparisons will be drawn with the UK Government choosing to announce £30billion of measures for the economy. What this shows is that from a State aid perspective, and even within the current rules, there is plenty of headroom for the UK Government to be more interventionist if it wants to be. Nothing in those rules sets a maximum State aid allowance per country. That remains a political choice."

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