Scoreboard shows continued trend towards less and better targeted aid
- Published on Thursday, 01 December 2011 10:57
- Written by Scott Buckler
The volume of national support to the financial sector actually taken by banks between October 2008 and 31 December 2010 amounted to around €1.6 trillion (13 % of GDP), the European Commission's autumn state aid scoreboard shows
The bulk (74%) came in the form of State guarantees on banks' wholesale funding (see more figures below). The Commission today prolonged the crisis state aid regime for banks, but clarified its rules on remuneration of recapitalisations and revised its rules on fees for interbank financing guarantees to ensure the State is adequately remunerated (see IP/11/1488).
Support to the real economy on the basis of temporary crisis rules dropped to €11.7 billion in 2010, a fall of nearly 50% compared with 2009, reflecting both a low uptake and the budgetary constraints of most EU Member States. The Commission, therefore, is not proposing to extend the Temporary Framework as the normal aid rules, e.g. to promote risk capital investment, to improve energy efficiency or to help small and medium-sized enterprises (SMEs), are equally adequate at this juncture. The short-term export credit insurance, to help palliate market failure, is still in force and the one-off subsidy of €500,000 per company was replaced in 2010 already by the normal de minimis rule.
Total non-crisis aid remained stable at €73.8 billion in 2010 or 0.6% of 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 82% (around €12 billion) clawed back at the end of June 2011 thanks to the Commission's action and also, probably, the pressure to correct public finances.
"The key condition to disconnect the life-support machine between the State and the financial sector is to solve the sovereign debt crisis. Our analysis shows that, thanks to our state aid control, the support fulfilled its purpose of protecting economic and financial stability without so far any irreparable damage to competition and to the single market," Commission Vice-President in charge of competition policy Joaquín Almunia said, adding: "I'm determined to revert to normal rules as soon as market conditions permit and to ensure the aid received by banks and by the real economy is geared towards increasing growth and jobs".