Europe

Commission approves UK guarantee scheme to stabilise trade credit insurance market in #Coronavirus outbreak

The European Commission has approved, under EU state aid rules, a UK guarantee scheme to support the trade credit insurance market in the context of the coronavirus outbreak. Trade credit insurance protects companies supplying goods and services against the risk of non-payment by their clients. Given the economic impact of the coronavirus outbreak, the risk of insurers not being willing to maintain their insurance coverage has become higher.

The UK scheme ensures that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs. The measure has a maximum budget of approximately €11 billion (£10bn). The Commission assessed the measure under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve state aid measures implemented by member states to remedy a serious disturbance in their economy. The Commission found that the scheme notified by the UK is compatible with the principles set out in the EU Treaty and is well targeted to remedy a serious disturbance to the British economy.

In particular, (i) the trade credit insurers have committed to the UK to maintain their level of protection as before the coronavirus outbreak in spite of the current difficulties; (ii) the guarantee is limited to only cover trade credit originated until the end of this year; (iii) the scheme is open to all credit insurers in the UK; (iv) the guarantee mechanism ensures risk sharing between the insurers and the state; and (v) the guarantee fee provides a sufficient remuneration for the UK.

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The Commission found that the scheme notified by the UK is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) TFEU and the general principles set out in the state aid Temporary Framework.

Furthermore, the Commission has found the scheme is in line with the short-term export-credit Communication. On this basis, the Commission has approved the measure under EU state aid rules. The non-confidential version of the decision will be made available under the case number SA.57451 in the state aid register on the Commission’s competition website once any confidentiality issues have been resolved.

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Tags: coronavirus, eu, featured, full-image, trade credit insurance, UK

Category: A Frontpage, coronavirus, Coronavirus face masks, Coronavirus Global Response, COVID-19, EU, EU, European Commission, European Parliament, Health, PPE, UK, Uncategorized


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