13 March 2020
By Bryan Smyth
bryan@TheCork.ie
Kelleher responds to EU Commission Coronavirus economic package
Responding to the announcement by the European Commission on a package of messages to support European economies affected by Coronavirus, Fianna Fáil MEP, Billy Kelleher MEP said:
“This is a proactive and considered response and one which I believe will provide confidence to the markets, employers, workers and governments.
“The commitment to fast track and approve State Aid exemption requests within 24 hours for the hospitality, retail, tourism and transport sectors is of crucial importance. I am already hearing of job losses in these sectors.
File photo of Cork based Fianna Fail MEP Billy Kelleher
“The Irish government should immediately assess opportunities to intervene and make the applications as quickly as possible to the Commission. We must support businesses to maintain employment at all costs.
“Additionally, the commitment that governments will be supported to ensure banks have adequate liquidity to maintain lending is crucial. A lack of credit from our banks to SMEs and families at this time would be simply unacceptable. I welcome the European Central Bank’s statement earlier this week that banks can fully use capital and liquidity buffers to ensure their ability to service the real economy.
“Member states can use the full flexibility of the Stability and Growth Pact. They can use spending to support the labour market, the most affected companies and the health service.
“In addition to State Aid flexibility changes, additional expenditure on the retail, catering, tourism, aviation and transport sectors can be delivered without being included in Ireland’s deficit calculation.
“We need a fiscal response to the pandemic right now. Hard cash and access to credit are what are needed by governments, businesses and families. EU finance ministers should be in continuous communication about measures they are taking to ensure a united response.
“This is the right approach from the Commission. EU level coordination, in terms of the health response as well as the economic response, is essential.
“Just as our peoples are interconnected, so too are our economies, and while every member state must do what is necessary locally, we can fight this pandemic better if we are united at a European level,” concluded Kelleher.
Facts & Figures
Full details of Commission package available here: https://ec.europa.eu/transparency/regdoc/rep/1/2020/EN/COM-2020-112-F1-EN-MAIN-PART-1.PDF
Key points below
- Existing instruments in the EU budget will be deployed to make available €1 billion as a guarantee to the European Investment Fund. This will support Member States in providing liquidity and other support to the hardest hit SMEs.
- Under the same instruments, the worst affected companies will be afforded “credit holidays”, meaning the permitted delay in repayment of loans.
- Both the European Central Bank (ECB) and the European Banking Authority (EBA) have issued policies to mitigate the impact of COVID-19. The EBA reiterates the existing flexibility in the framework that would allow Member States to provide guarantees to banks experiencing liquidity constraints. Likewise, the ECB announced that banks can make full use of the existing capital and liquidity buffers to ensure that they can continue to service the real economy.
- The Commission has launched a “Coronavirus Response Investment Initiative”. It will direct €37 billion under the cohesion policy to the COVID-19 outbreak. Moreover, the Commission has committed to relinquishing this year’s request for Member States to refund unspent financing for European structural and investment funds.
- This should amount to around EUR 8 billion held by Member States.
- The Commission has outlined several measures which are permissible under the current state aid regime. These include, wage subsidies, foregoing corporate taxation and providing liquidity to companies facing bankruptcy. Whilst some of these measures require approval from the Commission, the Commission has committed to providing advice and expatiated decision-making.
