The European Commission's latest State Aid Scoreboard shows that Member States are increasingly using the possibilities offered by the recently revised EU state aid rules to better target their aid. Member States awarded on average 80% of their aid to horizontal objectives in 2007, compared with around 50% in the mid-1990s with increased spending on R&D and environmental aid. Faced with the current financial crisis, coordinated action by Member States and the Commission has ensured that support schemes for the financial sector could be implemented quickly in compliance with EU state aid rules.

Over the last 25 years, the overall level of state aid has fallen from more than 2% of GDP in the 1980s to around 0.5% in 2007. Whilst highlighting the continuing trend for Member States to focus their aid on horizontal objectives, the Scoreboard notes however that following the recent financial crisis, the share of rescue and restructuring aid is likely to increase significantly for some countries in 2008.

Fast-track decision procedure on State Aid to tackle financial crisis

Coordinated action by Member States and the Commission, has allowed the rapid implementation of adequate support schemes to meet the financial crisis challenge in compliance with EU state aid rules.

Exceptional circumstances on the markets and the large number of notifications provide a significant challenge for the Commission to deal with these cases quickly, while ensuring that measures are proportionate and do not discriminate between companies. With good cooperation from Member States and the quick set-up of a fast-track procedure, the Commission has managed to respond to notifications and to adopt decisions in record time, sometimes even within 24 hours as it was the case for Bradford and Bingley.

Simpler procedure and better enforcement actions for State Aid

Following the reforms launched by the State Aid Action Plan in 2005, an increasing number of aid measures are now exempted from ex ante Commission scrutiny, either by the de minimis Regulation or by the recently adopted General Block Exemption Regulation (GBER). This allows the Commission to focus on the most distortive cases.

Already in 2007, before the GBER, block exempted aid measures accounted for 65% of all measures compared with 40% in 2002 though this is not yet reflected to the same extent in terms of expenditure: 13% of total aid was awarded through the block exemptions in 2007 (compared with 6% in 2006). The GBER now makes it easier for Member States to grant the right type of aid and in particular to facilitate access to finance especially for SMEs, and so tackle the current financial and economic crisis even more effectively.

The Scoreboard also notes progress in the recovery of illegal and incompatible aid. At the end of June 2008, there were 47 pending recovery decisions compared with 93 at the end of 2004. Moreover, €7.1 billion has been effectively recovered as well as €2.4 billion of interest. This means that almost 90% of the total amount of illegal and incompatible aid had effectively been repaid by its beneficiaries by the end of June 2008 compared with only 25% at the end of 2004.