EU Launches Initiatives to Counter the Economic Impact of the Coronavirus

//EU Launches Initiatives to Counter the Economic Impact of the Coronavirus

 The Coronavirus outbreak presents a major challenge to the entire European Union. The Commission has, therefore, launched economic initiatives to mobilise cohesion policy to flexibly respond to the rapidly emerging needs in the most exposed sectors, such as healthcare, SMEs and labour markets, and help the most affected territories in Member States and their citizens.

As European economies continue to decelerate, presenting challenges to policymakers tasked with reviving growth as the Coronavirus outbreak disrupts global supply chains and saps business and investor confidence around the world, European support must be conceived and applied in no time.

In this respect, the European Parliament adopted three urgent proposals that come as a support for people and businesses, in an effort to limit the effects that have arisen within the coronavirus global pandemic background.

The approved proposals focus on the following major measures that are embedded in a bailout, namely:

The first measure refers to the Corona Response Investment Initiative that aims to channel EUR 37 billion to countries hit the hardest by the Coronavirus pandemic. The funds will be directed towards healthcare systems, support of short time work schemes and SMEs working capital. In order for affected countries to access these funds, the Commission has established a task force to provide answers to all the questions about the implementation of the initiative.

Moreover, an extension of the scope of the EU Solidarity Found (EUSF) has been taken into account in order to cover public health emergencies.

Although the EUSF was initially founded in 2002 as the main financial instrument for disaster recovery such as natural disasters determined by flooding, earthquakes or storms, nowadays its scope has been extended by the addition of public health crises, including medical assistance and different categories of measures to contain the spread of the disease.

The measures will make up to EUR 800 million available for European countries in 2020. Whereas only the scope of EUSF was amended as to be applicable in the actual context, in terms of procedure, the conditions for obtaining such support were not amended. In this case, the EUSF can be triggered by requesting such funds by the affected Member State, which has to be submitted to the Commission and, afterwards, the Commission assesses the application and if the case, the aid is paid out immediately and in a single installment.

Another initiative envisages temporarily suspending EU rules on airport slots. The proposal responds to the rapid spread of cases of COVID 19, which has led to a substantial drop in the number of flights and forward bookings.  The temporary suspension means that airlines are not obliged to use their planned take-off and landing slots to keep them in the next corresponding season. The ‘use it or lose it’ rule will be waived for the whole summer season until October 24, 2020.

The exceptional situation created by the unprecedented challenges related to the Coronavirus outbreak determined a context where specific measures need to be taken to support all the affected Member States. Such measures will enter into force once published in the Official Journal of the European Union.

This piece of information is brought forward by the attorneys at law of Zamfirescu Racoți Vasile & Partners.