Brussels allows six more months of state aid due to high energy prices

The almost open bar of State aid to cushion the rise in energy prices will be open for six more months, until June 30, 2024. At the end of this year, the regulation that makes it easier for countries to lend was scheduled to end. aid to companies suffocated by energy prices, but finally the European Commission has extended the measure for another half year. The initial intention of the Competition Department was to grant a three-month extension, until March 31, and with that intention it opened a consultation on November 6. Having heard the capitals, the Community Executive has changed its plans and has extended its initial plan more than expected.

This extension of the lax aid regime for six more months represents, in a way, a contradiction with the budgetary recommendations that the European Commission has been issuing since at least the spring, when Brussels began to consider the energy crisis over. The argument used by the Executive for the step announced this Monday is that although the situation is no longer as difficult as a year ago, the price of raw materials continues to have a high component of uncertainty, something that was included in the economic forecasts. community statements released a week ago. The aim is, therefore, to leave the door open so that the States do not have their hands tied during the winter and something else in case the situation worsens again, something that cannot be ruled out given the geostrategic scenario open to the doors of the EU ( the invasion of Ukraine by Russia and the war between Israel and Hamas).

The first regulation that allowed States to come to the aid of companies hit by the energy crisis was approved on March 23, 2022, just a month after Russia invaded Ukraine, a fact that aggravated the price situation in the energy markets. gas. It was subsequently extended and amended in June and October of the same year, until on March 9 of this same year, the Commission greatly expanded the margin to provide State aid with a legal framework that endorsed subsidies to support companies hit by the crisis, but also to promote the energy and digital transitions in the long term. In fact, this new regulation was presented almost as a response to the multimillion-dollar injections to the private sector planned in other regions of the planet (United States, China, Japan) so that it would not lose competitiveness.

Now Brussels will allow the extension of the few lines of aid that expired this year, because that regulatory framework approved in March maintained the legal relaxation until 2025. Specifically, it extends two: the one that allows aid of up to 2.25 million euros to companies hit by the increase in prices in most economic sectors, the amount is even increased by 250,000 euros because the limit is now set at two million, and which allows partial compensation to energy-intensive companies to “cover an additional part of energy costs that significantly exceed pre-crisis levels.”

Lowering the requirements for granting state aid was one of Brussels’ economic responses to the beginning of the invasion of Ukraine and the outbreak of the energy price crisis. The decision had a very close precedent, even still in force at that time: the relaxation adopted during the pandemic to support a private sector to which many restrictions were imposed to stop the health crisis. The immediate consequence in 2020 was that public aid skyrocketed. If in 2019 the total amount rose to around 140,000 million, a year later it rose to almost 390,000, including the United Kingdom (320,000 without adding it). A year later, in 2021, without London after Brexit, the figure was practically the same, according to Commission data.

There is still no data for 2022 or, of course, 2023, but the provisional numbers of aid lines – not money spent – to which Brussels has given the go-ahead advance significant figures: until last August the number of lines of subsidies, credits or support launched from the States with the backing of the Commission covered by the regulation approved in March amounted to 741,000 million euros, half of which correspond to Berlin initiatives.

Follow all the information about Economy and Business on Facebook and Xor in our weekly newsletter

The Five Day agenda

The most important economic quotes of the day, with the keys and context to understand their scope.

RECEIVE IT IN YOUR MAIL

Subscribe to continue reading

Read without limits

_

#Brussels #months #state #aid #due #high #energy #prices