Latest EU developments in light of COVID-19

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This update summarizes the latest developments and measures in light of the COVID-19 crisis.

Latest news

Since a second wave of severe COVID-19 restrictions will also have economic repercussions, the European Commission decided on 13 October to prolong and extend the scope of the Temporary Framework for State Aid. The Temporary Framework is prolonged for six months until 30 June 2021, with temporary recapitalization measures being prolonged for an additional three months until 30 September 2021. The Temporary Framework provides Member States with the flexibility to support the economy while trying to maintain a level playing field in the context of the COVID-19 economic recovery and resilience. The amendment of 13 October extends the Temporary Framework through the introduction of a new measure allowing Member States to help out companies that face a turnover during the eligible period of at least 30% compared to the same period of 2019. Member States will be allowed to compensate up to €3 million per undertaking for fixed costs not covered by their revenues. The Temporary Framework was first introduced in March 2019. On 13 October, the Council also adopted a recommendation to facilitate free movement across Europe.

Relevant initiatives at EU level

  • On 12 October, in the framework of the German Presidency of the Council of the EU, the German Bundestag organized an interparliamentary conference on stability, economic coordination and governance in the EU. The dialogue between the national parliaments and the European Parliament focused on common budgetary rules in the EU, which is particularly relevant in the context of the COVID-19 crisis. For the first time in history, the general escape clause of the Stability and Growth Pact has been triggered, so that Member States’ deficit can exceed 3% of GDP in the fight against the economic consequences of the pandemic.
  • On 9 October, the European Commission published a full list of all Member State measures it approved under Article 107 TFEU and the Temporary Framework for State Aid;
  • The new agenda of the College of Commissioners reveals the policy agenda until the end of the year. Amongst others, the agenda shows we can expect the Commission to publish its work program for 2021 on 19 October.

National measures

  • As of this weekend, France will impose a four-week curfew on nine main cities to combat the deteriorating health situation;
  • The Netherlands returned into a partial lockdown as the country witnesses one of the worst infection rates in the EU;
  • The leader of the Polish ruling party Law and Justice (PiS) Jarosław Kaczyński threatened to veto the EU budget and Recovery Fund if the EU leaders keep insisting on the introduction of rule-of-law conditionality linked to the allocation of funds;
  • Portugal decided to return to a ‘state of calamity’ meaning that mouth masks are obliged in busy streets and the work place, that social contacts are limited and also other major restrictions are being introduced;
  • Spain is expected to suffer the worst economic hit by the COVID-19 crisis of all euro economies. The International Monetary Fund (IMF) predicted the Spanish GDP will decrease by 12.8% in 2020.
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