News In Focus
13 February 2009
EU relaxes state aid rules
The European Commission has authorised selective state aid measures to individual businesses during the current economic recession.
Although state aid to individual businesses is generally prohibited, the European Treaty allows aid intended to remedy a serious disturbance in the economy of a member state. The Commission approved a temporary framework giving member states additional possibilities for providing businesses with improved access to financing, and the scheme now approved is the first in a series of aid measures planned by the UK.
Under the scheme, public sector bodies will be able to offer limited amounts of aid in 2009 and 2010, up to a maximum of €500,000 for an individual business, to businesses in difficulty as a consequence of the crisis or facing funding problems because of the credit crunch, provided the conditions of the Framework are met.
The Cabinet Secretary for Finance and Sustainable Growth, John Swinney, welcomed the move and said the Scottish Government had led the UK in applying to the EC to allow Scotland to take advantage of the increased flexibility.
Ministers were delighted with the Commission's quick response and will work with public sector bodies across Scotland to coordinate the provision of grants under the new rules. Mr Swinney has written to COSLA to start that process.
Mr Swinney said: "This flexibility will allow us to take action across the public sector to help businesses which, although they have sound business plans and good prospects, find themselves cut off from financing due to the drying up of the lending market.
"Although it doesn't mean an increase in the budgets of existing grant schemes, it does mean we can target the finance we provide more effectively.
"This kind of action is central to our economic recovery programme and we will now work closely with partners such as the enterprise agencies and local authorities to ensure companies across Scotland can benefit to the maximum."