On April 2nd, 2020 the European commission (the “EC”) proposed a new instrument for temporary Support to mitigate Unemployment Risks in an Emergency (“SURE”) regarding the Covid-19 pandemic consequences.
By means of SURE financial assistance will be provided:
- in the form of loans from the EU to Member States;
- granted under favourable terms;
- of up to EUR 100 billion in total.
What is the purpose of the SURE?
Assistance to the Member States to cover their expenses in order to ensure that workers receive an income and businesses keep their staff. Financial assistance for self-employed persons will also be provided in order to replace the income lost.
Short-time work schemes
Short-time work schemes can prevent wasteful redundancies. SURE will support such schemes to help Member States protect jobs, employees and self-employed persons against the risk of dismissal and loss of income.
Employers will be able to temporarily:
- reduce the hours of employees; or
- suspend work altogether,
with income support provided by the State for the hours not worked.
Self-employed persons will receive income replacement for the current emergency.
What is the amount of the funding?
- The amount of the funds available to all the Member States as financial assistance are at the total amount of EUR 100 billion.
- There are no pre-allocated envelopes for Member States.
Fundraising
The loans will be based on guarantees provided by Member States and will be directed to where they are most urgently needed.
The instrument will start to function once all Member States have committed to those guarantees.
To finance the loans to Member States, the Commission will borrow on financial markets. The Commission would then provide the loans to Member States on favourable conditions. Member States would, therefore, benefit from the EU’s strong credit rating and low borrowing costs.
Provision of financial assistance
Loans provided to Member State under the SURE instrument would be underpinned by a system of voluntary guarantees from Member States. This will allow the Commission to expand the volume of loans that can be provided to Member States. For this purpose a minimum amount of committed guarantees is needed – i.e. 25% of the total amount of EUR 100 billion.
What is next?
- The Commission’s proposal for a SURE instrument will need to be swiftly approved by the Council.
- The new instrument will be temporarily applicable.
- Its duration and scope are limited to tackling the consequences of Covid-19.