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Inception date: 01 Jan 2009 | Removal date: 01 Jan 2012

Interest payment subsidy

On 28 January 2009, the United Kingdom notified the European Commission of its framework titled "Small amounts of compatible aid".

The United Kingdom considers that the financial crisis is affecting its whole economy at local, regional and country levels. The notified measure is aimed at remedying a serious disturbance in the economy of the UK. The measure provides for the provision of "small amounts" of aid to private companies over the next two years.
The scheme is explicitly based on Article 87(3)(b) ECT, and relies on section 4.2.2 of the Commission communication "Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis".
The aid will be provided in transparent form, in particular, in the form of direct grants, reimbursable grants, interest rate subsidies, subsidized public loans and public guarantees or another method which might in the future be accepted by the Commission.
The aid volume available under this scheme has not yet been confirmed, but it is estimated by the UK authorities not to exceed Ł1 billion. Aid under this scheme can be granted in 2009 and 2010. The scheme applies to SMEs and large firms. The UK estimates the number of beneficiaries to exceed 1000 firms. The scheme applies in all sectors.
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 aid is granted from national, regional and local state resources, via the respective aid granting authorities at national, country, regional, or local level. The measure is selective since it will be granted only to certain firms. The measure conveys an advantage by making available limited amounts of aid which would not be available to the beneficiaries without the measure. 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. The measure distorts or threatens to distort competition." (par. 20 - 24 of the official letter from the EC to the UK - Brussels, 4.02.2009 C(2009)803).
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. 26-29 of the letter).
Extension of a temporary state aid scheme "Small amounts of compatible aid" - State aid SA.32110
On 10 January 2011 the European Commission announced an extension of theUK state aid scheme called 'Small amounts of compatible aid'. The newend date for the scheme is now 31 December 2011.
The motive for this measure is to aid companies from all sectors torecover from the recent financial crisis, and officially "aid to remedyserious disturbances in economy". The overall and annual budget is 500million euros. (State aid number 32110). No official letter is available yet.
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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