Temporary support to mitigate unemployment risks in an emergency due to the COVID-19 outbreak (SURE)

KEY POINTS

• Article 122(2) of the Treaty on the Functioning of the European Union allows the Council to grant EU financial assistance to Member States experiencing (or seriously threatened with) difficulties caused by exceptional occurrences beyond their control.
• Under the SURE regulation, a Member State may request EU financial assistance in support of national measures, such as short-time work schemes, to address the socioeconomic effects of the COVID-19 outbreak, where its actual (and possibly also planned) public expenditure has suddenly and severely increased after 1 February 2020.
• Financial assistance would be provided upon request, in the form of a loan, paid in installments. For this purpose, the European Commission and the Member State concerned would conclude a loan agreement in accordance with Article 220(5) of the EU’s Financial Regulation (Regulation (EU, Euratom) 2018/1046 — see summary).
• To provide for the funding for the SURE Instrument, the Commission is empowered to borrow on the capital markets or with financial institutions on behalf of the EU at the most appropriate time to optimise the cost of funding and preserve its reputation as the EU’s issuer in the markets. Member States may contribute to the SURE Instrument by counter-guaranteeing the risk thus borne by the EU. Such contributions are to be provided in the form of irrevocable, unconditional and on-demand guarantees. The amount of guarantee contributed by each Member State corresponds to its relative share in the total gross national income of the EU of the total amount of €25 billion. The Commission concludes a guarantee agreement with the contributing Member State, setting out the payment conditions.
• The maximum amount of financial assistance available under SURE is €100 billion for all Member States.
• The SURE Instrument aims to complement national measures taken by the affected Member States to mitigate the direct economic, social and health-related effects of the COVID-19 outbreak.

Procedure for requesting and approving financial assistance

• Financial assistance is made available by means of a Council implementing decision adopted on the basis of a Commission proposal and after consultation with the Member State concerned.
• For this purpose, the Member State concerned provides the Commission with appropriate evidence related to the sudden and severe increase in actual (and possibly also planned) public expenditure directly related to short-time work schemes and similar measures, as well as, where appropriate, to relevant health-related measures, due to the COVID-19 outbreak.

Prudential rules

• The Commission, on its part, is obliged to implement the following prudential rules applicable to the SURE loan portfolio:
  • the share of loans granted to the 3 Member States representing the largest share of the loans may not exceed 60% of the maximum amount (i.e. 60% of €100 billion);
  • the amounts due by the EU in a given year may not exceed 10% of the maximum amount of the SURE Instrument (i.e. 10% of €100 billion);
  • where necessary, the Commission may roll over the associated borrowings contracted on behalf of the EU.
• The Council implementing decision will include:
  • the amount of the loan, maximum average maturity, pricing formula, maximum number of installments, availability period and other relevant rules for the granting of the financial assistance;
  • an assessment of the Member State’s compliance with the conditions for using the SURE Instrument;
  • a description of the national short-time work schemes or similar measures and, where appropriate, health-related measures, that may also be financed under the SURE regulation.
• When adopting the implementing decision, the Council considers the Member State’s existing and expected needs as well as requests for SURE financial assistance already submitted or planned to be submitted by other Member States, while applying the principles of equal treatment, solidarity, proportionality and transparency.

Administration, possible use of guarantees and availability of the SURE Instrument

• The Commission establishes the necessary arrangements for the administration of the loans with the European System of Central Banks. The beneficiary countries open special accounts with their national central bank to manage the financial assistance received.
• In the event that, in spite of the application of all the prudential rules, the Commission may need to call on the guarantees provided by Member States, it is expected, before calling on these guarantees, to examine whether it can draw on the margin available under the own-resources ceiling for payment appropriations, to the extent the Commission deems sustainable, having regard to, among other things, the total contingent liabilities of the EU and the sustainability of the general budget of the EU.
• The SURE Instrument will become available once all Member States have contributed their share of the guarantees (see above). The period of availability of the SURE Instrument during which a Council implementing decision granting the financial assistance may be adopted ends on 31 December 2022. The Council, following a proposal from the Commission, may decide to extend the period of availability of the SURE Instrument, each time for an additional period of 6 months, where the Commission concludes that the severe economic disturbance caused by the COVID-19 outbreak affecting the financing of the relevant measures continues to exist.
• The regulation does not apply in the United Kingdom.