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The EU Is Preparing To Nationalize Enterprises In Exchange For State Aid

The EU Is Preparing To Nationalize Enterprises In Exchange For State Aid

Brussels is finalizing a draft law that should allow the EU States to fully or partially nationalize enterprises in exchange for state assistance. This was reported on April 23 by the Spanish newspaper Expansion with reference to the working version of the Directive, which may be adopted in the next few days.

It means that States will be able to enter the capital of large and small companies to help them avoid bankruptcy against the background of the coronavirus pandemic and the global economic crisis.

According to the Spanish publication, the minimum threshold for the state to enter the company's capital may be the amount of assistance of 100 million euros. At the same time, Germany and France believe that the lower threshold should be raised to 500 million euros.

According to Expansión, the working draft explains that these steps are aimed at "ensuring that the contribution of these companies to the proper functioning of the EU economy is not compromised."

At the same time, Spain treats the new measure with caution, since the different EU Member States have different opportunities to save their businesses, which will lead to a violation of the competitive environment.

As early as March 19, the European Union stated that it intended only to help companies to ease their situation, mainly through state guarantees for loans, wage subsidies, and tax deferrals. However, a little more than a month later, the EU's position has changed significantly, and now we are talking about nationalization, which should help avoid "a large number of bankruptcies."

At the same time, some countries have already begun to nationalize individual companies. So, back in mid-March, Italian transport Minister Paola de Micheli announced that the national airline Alitalia (49 percent owned by Etihad Airways) can switch to the state's balance sheet.

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