IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

Yes

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

SMEs

JUMBO

No

TARIFF PEAK

No
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Inception date: 14 Mar 2012 | Removal date: 30 Jun 2012

Loan guarantee

On 14 March 2012, the European Commission approved a GBP 20 billion (approx. USD 31.2 billion) million loan guarantee scheme from the United Kingdom known as the "National Loan Guarantee Scheme". The aid will support SMEs by reducing the cost of financing transactions through the provision of state-backed guarantees. The scheme is in force until 30 June 2012.

Under the National Loan Guarantee Scheme, the government will provide guarantees available to participating banks, who will be obliged to pass on the lower cost of funding to SMEs. In this sense, the final beneficiaries are national or UK-based SMEs defined as companies with an annual turnover of less than GBP 50 million. No specific requirements in terms of economic sectors were provided. 

In this context, the Vice-President of the Commission in charge of competition policy, Joaquín Almunia, highlighted that "the National Loan Guarantee Scheme will reduce borrowing costs for SMEs thanks to a State guarantee, without unduly distorting competition".

The European Commission noted the: "The NLGS therefore represents a form of public financing, directed at certain beneficiaries engaged in an economic activity affecting trade between Member States, and distorts or threatens to distort competition inside the internal market."

Regardless, the Commission has decided not to raise objections to the aid on the grounds that the measure "is compatible with the internal market on the basis of Article 107(3)(b) TFEU". 

The state aid is notified under the following objective: Remedy for a serious disturbance in the economy.

A state act in the GTA database is assessed solely in terms of the extent to which its implementation affects foreign commercial interests. On this metric, the financial support granted here is discriminatory.

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