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EU Loan to Mitigate Unemployment Risks

D&T
May 21, 2020

As part of its emergency support package to tackle the economic impact of the COVID-19 crisis, the EU has put in place a temporary instrument to help workers keep their jobs during the crisis.

On May 19, the European Council adopted SURE (European instrument for temporary Support to mitigate Unemployment Risks in an Emergency), a scheme which can provide up to EUR 100 billion of loans under favourable terms to member states. The instrument enables member states to request EU financial support to help finance the sudden and severe increases of national public expenditure, as from February 1, 2020, related to national short-time work schemes and similar measures, including for self-employed persons, or to some health-related measures, in particular at the work place in response to the crisis.

SURE is one of the three safety nets, worth EUR 540 billion, for jobs and workers, businesses and member states, contained in the Eurogroup report agreed on April 9, 2020. EU leaders endorsed the report on April 23 and called for the package to be operational by June 1, 2020.

“The measures targeted by SURE are very similar to the short-time working and wage support programs already launched in Hungary, so it is possible to expand the previous domestic programs or start new ones from the additional resources provided by the instrument,” Deloitte partner Dr. Csaba Márkus commented.

The COVID-19 pandemic constitutes an exceptional challenge for Europe, as it puts many lives and livelihoods at risk. Beyond the public health implications, the outbreak has also caused massive economic and social disruption with many companies having to rely on public support to preserve employment. SURE will be a vital safety net to protect jobs and workers as it will ensure that member states have the necessary means to finance measures to tackle unemployment and loss of income, as well as some health-related measures.

A press release by the European Council says that while all member states will be able to make use of the instrument, SURE will act as a particularly important safety net for workers in the hardest-hit economies. Formally, the financial assistance will be granted by a decision adopted by the Council on a proposal from the Commission.

SURE will become available after all member states have provided their guarantees. The instrument will then be operational until 31 December 2022. On the proposal from the Commission, the Council may decide to extend the period of availability of the instrument, each time for a further 6-month period, if the severe economic disturbances caused by the COVID-19 outbreak persist.

D&T

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