Brexit, EU State Aid Rules and Mr Rishi Sunak's coronavirus bailout package
In recent days, the UK Chancellor of the Exchequer, Rishi Sunak, has announced a number of eye-watering measures to support UK individuals and businesses through the increasingly turbulent effects of the coronavirus emergency.
These includes temporary business rates exemptions for the retail, hospitality and leisure sectors, payment of 80% of wages up to £2,500 a month for three months for workers who would otherwise have been made redundant as result of the Coronavirus emergency, grants of £10,000 for very small businesses and £25,000 for small businesses in the retail, hospitality and leisure sectors , the increased availability of loans for big businesses, temporary VAT holidays, temporary mortgage holidays, more generous statutory sick pay and universal credit , temporary bans on possession orders against residential tenants who cannot pay rent because of problems caused by the Coronavirus emergency and a host of other measures.
How does this tie in with the EU State Aid Rules by which the UK continues to be bound at least during the transition period expiring on 31str December 2020?
The UK Treasury is reported to have applied to the EU for any necessary waivers from the EU State Aid Rules in the expectation that such waivers would be granted because of the exceptional circumstances and presumably bearing in mind that Article 107 of the Treaty on the Functioning of the European Union itself contains an exemption from the EU State Aid Rules for "aid to make good the damage caused by natural disasters or exceptional occurrences".
The European Commission is , however, reported by The Times of 21 March 2020 to have said that UK ministers would be allowed to issue only "selective tax advantages" and grants worth €800,000 per company. This is consistent with the State Aid Temporary Framework adopted by the European Commission on 19 March 2020 , which authorises 5 types of State Aid including "selective tax advantages" and grants worth €800,000 per company. This may mean that certain categories of support within Mr Sunak's bailout package would be unauthorised under EU law.
Many EU countries have announced generous bailout programmes of their own to combat the devastating economic effects of the Coronavirus on their businesses and populations and it may not be the case that the UK's bailout package is out of line with theirs. The difference, of course, is that the UK no longer has a direct vote in the EU's decision- making structure and has to rely on the untested waters of the UK-EU Withdrawal Agreement to ensure that it is fairly treated by the EU during the transition period.
The Coronavirus is the classic "black swan" whose dire impact with hindsight could have been foreseen but was not.
The UK and the EU will have to behave sensibly in the name of the common humanity that they represent to ensure that the law is applied in a fair and sensitive way to support the interest of all those who are suffering or will suffer as a result of the havoc caused by the Coronavirus.
