IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Mar 2009 | Removal date: 30 Dec 2010
Still in force

Loan guarantee

On 10 January 2009, the United Kingdom notified a loan guarantee scheme ("Temporary Aid in the form of Loan Guarantees" - State aid N 71/2009) under the Temporary Framework for State aid measures to support access to finance in the current financial and economic crisis.
 
The aid is provided in the form of subsidized guarantees for investment and working capital loans.
 
The UK authorities identified the common budgetary ceiling of GBP 8 billion for the implementation of this notified measure (N 71/2009) and the aid measures "Temporary aid in the form of Subsidised Interest Rate" (N 257/2009) and "Temporary aid for the production of green products" (N 72/2009). The beneficiaries of the scheme are all undertakings, whatever their location and size.
 
The Commission stated that the notified measure constitutes State aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
 
"State resources are involved in the notified scheme since the loan guarantees are made available by national, regional and municipal organizations. The measure is selective since guarantees are awarded only to certain undertakings. The measure confers an advantage by relieving the beneficiaries of costs which they would have to bear under normal market conditions since, without the intervention by the State, the beneficiaries would obtain loans only at higher costs, if at all. The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists." (par. 27-30 from the letter from the EC to the UK - Brussels, 27.2.2009 C(2009) 1449 final).
 
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
 
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 32-37of the letter).
 
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
 

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