Policy Briefs

P. Nicolaides: Unprecedented State Intervention

EU Member States have granted very large amounts of state aid to counteract the impact of the covid- 19 pandemic and the economic dislocation it has caused. This Policy Brief is a first attempt to calculate the number of measures implemented by Member States and the amount of state aid they dispensed to businesses in the period from March 2020 to February 2021. The aid appears to have provided much needed liquidity, but it may have also kept alive zombie companies.

In addition, the General Court of the EU delivered the first judgments on covid-19 related state aid. It has found national measures limiting the aid to companies licensed by national regulators to be compatible with EU law on the grounds that such a limitation is necessary and proportional for the purpose of ensuring that aid is used effectively by financially healthy companies. This Policy Brief argues that the exclusion of financially unviable companies and the proper use of state aid can also be achieved through better designed measures.

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