On 9 April, the EU Ministries of Financing have agreed to work on a comprehensive economic policy response to the COVID-19 outbreak. They have agreed on a EUR 500 billion packages of safety nets – one for workers, one for businesses and another one for countries.
One of three instruments is the ‘Support to mitigate Unemployment Risks in an Emergency (SURE)’ proposed by the European Commission on 2 April. This new temporary pan-European instrument worth up to €100 billion of loans dedicated to members states. The ministries highlighted that the proposal should be taken forward without delay in the legislative process.
The instrument is designed to protect jobs and employees affected by the coronavirus pandemic. The objective is to complement the efforts of the national governments to address sudden increases in public expenditures linked to preserving employment during the containment period. The member states’ position on this emergency instrument does not pre-judge the position on future proposals related to unemployment insurance.
About SURE loans
- Available money. EU financial assistance to the member states that request support, in the form of loans up to €100 billion granted on favourable terms. There are no pre-allocated envelopes for members states.
- Guarantee from members states. The new fund will be available after the member states offer a guarantee of minimum €25 billion. The guarantees will be on a voluntary basis and it will be irrevocable.
- Areas for financial assistance. These loans (not grants) will assist member states to address sudden and severs increases in public expenditure to preserve employment. It will cover the costs directly related to the creation or extension of national short-time work schemes and similar measures for self-employed.
- Credit’s conditions. To finance the loans to member states, the Commission will borrow on financial markets. The Commission will then provide the loans to member states which will benefit from the EU’s strong credit rating and low borrowing costs. There will be caps for the borrowing available for each member state.
- Temporary character. The European Commission will review every six months whether the exceptional circumstances causing the severe economic disturbances still exist.
- Complementary approach. The loans will complement the national measures taken by affected member states.
- Member states where the COVID-19 outbreak has led to a sudden and severe increase in public expenditure due to national measures adopted as from 1 February 2020.
- National measures should be directly related to the creation or extension of short-time work schemes and to similar measures for self-employed persons. Evidence of the sudden and severe increase in actual and possibly also planned expenditure for short time work schemes or similar measures.
For cities: practical considerations
- Cities are not eligible for the loans under SURE. The instrument is dedicated exclusively to the member states.
- SURE instrument is not offering grants. It enables loans at a favourable interest rate.
- 15 countries have expressed their interest for the moment.
The instrument is part of a wider response the EU is exploring to address the economic crisis related to the COVID-19. Read more about SURE instrument here.
1. EU Ministries of the Finances Report on the comprehensive economic policy response to the COVID-19 pandemic
2. European Commission proposal for European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following the COVID-19 outbreak
3. Factsheet: Supporting Member States to help protect people in work and jobs – SURE
Please find below the policy brief.