State aid: crisis-related aid aside, Scoreboard shows continued trend towards less and better targeted aid

Brussels, 28-12-2012 — /europawire.eu/ — The European Commission’s 2012 State Aid Scoreboard revealed that the volume of national support to the financial sector actually taken by banks between October 2008 and 31 December 2011 amounted to around €1.6 trillion (13 % of EU GDP). The bulk (67 %) came in the form of State guarantees on banks’ wholesale funding. Support to the real economy on the basis of temporary crisis rules dropped to € 4.8 billion in 2011, a fall of more than 50% compared with 2010, reflecting both a low uptake by companies and the budgetary constraints of most EU Member States.

Total non-crisis aid decreased and stood at €64.3 billion in 2011 or 0.5% of EU GDP and continued to re-focus on less distortive horizontal objectives such as aid for research and innovation, protection of the environment and providing risk capital to SMEs. The Scoreboard also shows Member States recovering illegal aid much faster, with 85% (around €13.5 billion) clawed back at the end of June 2012 thanks to the Commission’s action, probably facilitated by the pressure to consolidate public finances.

Support to banks

Between 2008 and 31 December 2011, €1 616 billion, was actually used to support financial institutions. This was composed of

• liquidity support: €1 174 billion (9.3 % of EU GDP) average outstanding State guarantees on banks’ funding and other (short-term) liquidity support measures; and
• measures to support bank solvency: €442 billion (3.5 % of EU GDP) in recapitalisation measures and treatment of impaired assets.

Three Member States accounted for nearly 60% of the total aid used; those are the United Kingdom (19 %), Ireland (16 %) and Germany (16 %).

Aid granted to the real economy – Temporary Framework

To minimise the impact of the tightening in credit conditions, Member States also granted aid to the real economy under a temporary framework adopted by the Commission at the end of 2008. The main support measure used was a one-off subsidy of up to €500 000 per company, which was replaced in 2011 by the normal €200 000 amount that can be granted to a company over three years without prior clearance by the Commission. This was followed by subsidised loan interests or guarantees, reduced interests for environmentally-friendly investments and risk capital aid. The temporary framework expired on 31 December 2011.

Between December 2008 and 1 October 2011, Member States made available €82.9 billion under the temporary framework. The amount taken up in 2011 was €4.8 billion, while it was €11.7 billion in 2010 and €21 billion in 2009. This indicates that market funding became more available over that period.

Long-term trends in non-crisis aid

Non-crisis aid decreased and was at €64.3 billion or 0.5% of EU GDP. Aid to industry and services amounted to €52.9 billion or 0.42% of EU GDP of which almost 90% was earmarked for horizontal objectives of common interest. Most notably, the Commission observed a greater focus on aid measures for regional development, research, and environmental protection, all of which contribute to the Europe 2020 strategic objectives of smart, sustainable and inclusive growth.

Almost 90% of total aid is granted through block exemptions or schemes (see IP/06/1765 and IP/08/1110). Once approved by the Commission, such procedures allow Member States to grant aid to individual companies without prior Commission scrutiny, offering Member States a high degree of flexibility and low administrative burden, while compatibility criteria safeguard a level playing field in the internal market. Only 12.5% of the total aid was assessed individually.

The Scoreboard further shows that more than €13.5 billion, representing about 85% of the total amount of illegal and incompatible aid, had been repaid by beneficiaries to the granting authority at the end of June 2012. This marks a further improvement as compared to previous years.

The Scoreboard including annexes, statistics and indicators for all Member States is available at:

http://ec.europa.eu/comm/competition/state_aid/studies_reports/studies_reports.html