The Commission approved €120 million for the Luxembourg scheme, which will fund COVID-impacted businesses that are still struggling to function
The Commission has been buying vaccines in anticipation of regulatory approval, but it has also been looking to defend and implement a Green economy in the restructuring of the way things work post-COVID. This includes stopping the collapse of individual economies, which are crucial to the whole picture.
What is the Luxembourg State aid scheme?
The Temporary Framework enacted under State aid rules by the EU is where this money is coming from. It provides for 12 different types of aid, that can be granted to Member States. The one being given by the Luxembourg scheme is support for uncovered fixed costs.
This means that companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 in the context of COVID, can be given money to support fixed costs – which are not covered by revenue. Under the scheme, Luxembourg will provide economic assistance to certain businesses, including those operating in the hospitality, accommodation and entertainment sectors, to help them face their liquidity shortages related to the pandemic.
The strategy has an estimated budget of up to €120 million.
Executive Vice-President Margrethe Vestager, in charge of competition policy, commented: “Many companies in Luxembourg, as in the rest of Europe, have seen their revenues significantly decline because of the restrictive measures necessary to limit the spread of the coronavirus. This scheme will enable Luxembourg to help these companies face their fixed costs that are not covered by revenues during this difficult time.
“We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules”.
Will these be loans or grants for COVID-impacted businesses?
Under the scheme, support will take the form of direct grants. The measure will allow the authorities of Luxembourg to support companies that suffered from a monthly turnover decline between November 2020 and March 2021 of at least 40% compared to the same period of 2019. The aid will help them pay 70% (90% in case of micro and small companies) of their fixed costs that are not covered by revenues, up to a maximum of €1 million per undertaking.
As of yesterday (23 November), Luxembourg is planning to adopt a stricter distancing policy – to limit contacts between people of different households, in the hope that this will enable the economy to continue healing itself. Minister Xavier Bettel announced that this stricter environment will begin on 26 November, for a period of three weeks.
The State is also looking to the stars for hope – as they open The European Space Resources Innovation Centre (ESRIC), which will seek to find water on the moon, metals and minerals in asteroids and to lay the foundation of a space-sponsored economic upsurge.