The European Commission has approved, under EU State aid rules, a
UK guarantee scheme to support the trade credit insurance market
in the context of the coronavirus outbreak.
Trade credit insurance protects companies supplying goods and
services against the risk of non-payment by their clients. Given
the economic impact of the coronavirus outbreak, the risk of
insurers not being willing to maintain their insurance coverage
has become higher.
The UK scheme ensures that trade credit insurance continues to be
available to all companies, avoiding the need for buyers of goods
or services to pay in advance, therefore reducing their immediate
liquidity needs.
The measure has a maximum budget of approximately €11 billion
(GBP 10 billion). The Commission assessed the measure under
Article 107(3)(b) of the Treaty on the Functioning of the
European Union (TFEU), which enables the Commission to approve
State aid measures implemented by Member States to remedy a
serious disturbance in their economy.
The Commission found that the scheme notified by the UK is
compatible with the principles set out in the EU Treaty and is
well targeted to remedy a serious disturbance to the British
economy.
In particular,
(i) the trade credit insurers have committed to the UK to
maintain their level of protection as before the coronavirus
outbreak in spite of the current difficulties;
(ii) the guarantee is limited to only cover trade credit
originated until the end of this year;
(iii) the scheme is open to all credit insurers in the UK;
(iv) the guarantee mechanism ensures risk sharing between the
insurers and the State; and
(v) the guarantee fee provides a sufficient remuneration for the
UK.
The Commission found that the scheme notified by the UK is
necessary, appropriate and proportionate to remedy a serious
disturbance in the economy of a Member State, in line with
Article 107(3)(b) TFEU and the general principles set out in the
State aid Temporary
Framework.
Furthermore, the Commission has found the scheme is in line with
the Short-term export-credit
Communication.
On this basis, the Commission has approved the measure under EU
State aid rules. The non-confidential version of the decision
will be made available under the case number SA.57451 in the
State aid register on
the Commission's competition website once any
confidentiality issues have been resolved.
