The European Commission on Thursday prolonged the temporary framework for state aid until the middle of next year to allow member states, where needed, to extend their support schemes and ensure that businesses still affected by the coronavirus crisis are not cut off suddenly from necessary support.

The temporary framework was set to expire on 31 December 2021 and has now been prolonged until 30 June 2022.

“Since the beginning of the pandemic, the State aid Temporary Framework has enabled Member States to provide targeted and proportionate support to businesses in need, while putting in place safeguards to preserve the level playing field in the Single Market,” said Executive Vice-President Margrethe Vestager, who is in charge of competition policy.

“The limited prolongation gives the opportunity for a progressive and coordinated phase-out of crisis measures, without creating cliff-edge effects, and reflects the projected strong recovery of the European economy overall,” she added.

The Commission has introduced two new tools to support the recovery of the EU economy – investment support measures to help member states address the investment gap, and solvency support measures to leverage private funds and make them available for investment in small and medium-sized enterprises, including start-ups, and small midcaps.

Member states may grant guarantees to private intermediaries, creating incentives to invest in these types of companies and provide them with easier access to such equity financing that is often difficult for them to attract individually.

The temporary framework was adopted on 19 March 2020 at the start of the coronavirus pandemic, when the economy found itself in trouble because of measures imposed to contain the infection. The framework, which allows derogation from the rules on state aid, has been amended several times since.