Interest savings by Member States under the Support to mitigate Unemployment Risks in an Emergency programme (SURE)

Subject: Interest savings by Member States under the Support to mitigate Unemployment Risks in an Emergency programme (SURE)

Page 271 of the Commission’s report ‘SURE: Taking Stock after Six Months’, published on 22 March 2021, states that the 15 Member States that have received SURE loans so far have saved on aggregate EUR 5.826 billion in interest payments due to the EU’s AAA credit rating. Italy, which received approximately 40 % of the EUR 53.5 billion-worth of loans, has saved EUR 2.835 billion in interest payments, roughly 50 % of the total interest savings.

Only 15 Member States have profited so far from the SURE programme, most of which are net receivers of EU funds. Since the EU’s AAA rating is mainly thanks to creditworthy northern European Member States, most of which are net contributors to the EU budget and have not received SURE funds thus far, and since the interest payments on the bonds will be borne by all Member States:

1. How is the SURE programme not in violation of the ‘no bailout’ clause under Article 125 of the Treaty on the Functioning of the European Union2?

2. How does the Commission justify the fact that one Member State can receive 40 % of the SURE envelope and reap 50 % of the initial interest savings?

1 https://ec.europa.eu/info/sites/info/files/economy-finance/com2021_148_en_act_part1_v6.pdf

2 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12016E125.

Answer given by Mr Gentiloni on behalf of the European Commission

(25 June 2021)

Article 125 of the Treaty on the Functioning of the EU does not intend to prohibit the Union from granting financial assistance to Member States. The temporary Support to mitigate Unemployment Risks in an Emergency (SURE) (3) is such a financial assistance instrument.

It provides loans to any Member State that fulfils SURE’s requirements, i.e. a sudden and severe increase in expenditure on short time work schemes and similar measures aimed at protecting employees and the self‐employed. To this end, the Commission borrows on capital markets and lends the proceeds to Member States. Any beneficiary Member State must fully repay the principal of the loan it receives as well as any interest due.

The allocation of loans takes into account the existing and expected financing needs of all Member States, having regard to the principles of equal treatment, solidarity, proportionality and transparency. A concentration limit also provides that the share of loans granted to the three Member States representing the largest share of loans granted should not exceed 60% of the total amount of loans (i.e. EUR 60 billion).

Italy, Spain and Poland together are at that concentration limit, after their requests were scaled down. Thus, they cannot ask for additional assistance under SURE (4).

By now, the Council has approved loans of EUR 94.3 billion under SURE to 19 Member States. A non-negligible amount of EUR 5.7 billion remains available to accommodate further needs of the Member States.

For any Member States, the interest savings are mainly determined by their own funding costs and are not linked to any transfer from any Member State to another.

⋅1∙ https://ec.europa.eu/info/sites/info/files/economy-finance/com2021_148_en_act_part1_v6.pdf

⋅2∙ https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12016E125.

⋅3∙ Council Regulation (EU) 2020/672 of 19 May 2020 on the establishment of a European instrument for temporary support to mitigate unemployment risks in an

emergency (SURE) following the COVID-19 outbreak, OJ L 159, 20.5.2020, p. 1 (https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/? uri=CELEX:32020R0672&from=en)

⋅4∙ The share of Italy’s loan represents 29% of the SURE loans approved by the Council by now and 27% of the total envelope under SURE. The 40% cited in the report is

an interim percentage reflecting a certain front-loading of Italy’s disbursements under SURE.