(June 16, 2020) On May 19, 2020, the Council of the European Union (Council) adopted “SURE,” a regulation establishing a European instrument to provide temporary financial support to mitigate unemployment risks caused by the COVID-19 outbreak. Under SURE, the European Union (EU) will temporarily provide loans not exceeding 100 billion euros (€) (about US$113.5 billion) to member states in need of financial support to mitigate the sudden increase in their public expenditures caused by financing national short-time work schemes or similar employment-preserving measures. Such loans are also available to cover increases caused by financing certain health-related measures. (SURE arts. 1–2, 5.) SURE will be available until December 31, 2022, but can be repeatedly extended for an additional six months while the economic disturbance continues. (Art. 12.)
An EU regulation has general application. It is binding in its entirety and directly applicable in the EU member states. (Consolidated Version of the Treaty on the Functioning of the European Union (TFEU) art. 288, para. 2.)
SURE is one of the three safety nets established as part of a support package worth €540 billion (about US$613.3 billion) for jobs and workers, businesses, and member states, which was proposed on April 9, 2020, by the Eurogroup. The Council endorsed the support package on April 23, 2020. The three safety nets are (1) SURE (for supporting jobs and workers); (2) a pan-European guarantee fund created by the European Investment Bank (EIB) for loans up to €200 billion (about US$227 billion) for businesses, with a preference for small- and medium-sized enterprises; and (3) the Pandemic Crisis Support program set up by the European Stability Mechanism (ESM) to support all euro-area member states with loans up to €240 billion (about US$272.5 billion).
The legal basis for SURE is article 122 of the TFEU, which allows the Council to grant financial assistance to a member state that is in difficulty or is seriously threatened with severe difficulties caused by exceptional occurrences beyond its control.
Conditions and Procedure for Obtaining Financial Assistance under SURE
A member state can request financial assistance under SURE if its actual or planned public expenditure has severely increased since February 1, 2020. (SURE art. 3.) The financial assistance, in the form of loans, will be used in either the creation or extension of national short-time work schemes or similar measures and, where applicable, used in support of “relevant health-related measures.” (Arts. 1–4.) Relevant health-related measures include measures ensuring the protection of workers in the workplace. (Recital 5.)
After the member state verifies the increase with “appropriate evidence,” the financial assistance will be made available by an implementing decision of the Council that includes the terms of the loan. (Art. 6.) The Commission and the Council will consider requests that member states plan on making along with requests that have already been made to ensure that member states are treated equally and that the share of the three largest loans will not exceed 60% of the total funding available. (Arts. 6, 9.)
Funding and Availability of SURE
The Commission will finance the loans by borrowing on behalf of the EU on the capital markets. (Art. 4.) Member states will guarantee the risk borne by the EU, and they will provide contributions in the form of “irrevocable, unconditional and on-demand guarantees.” Financial assistance under SURE will become available after all member states have signed their guarantee agreements with the Commission. The total contribution by member states will represent at least 25% of the total funding available, and the individual contributions of member states will be proportional to their share of the total gross national income (GNI) of the EU. Calls on guarantees provided by member states will be made proportional to their relative GNI shares. (Arts. 11–12.)
When a member state requests a loan for its planned public expenditure rather than its actual public expenditure, the member state must report on the implementation of the planned public expenditure every six months after submitting its request for financial assistance. (Art. 13.) The Commission will report on the use of financial assistance, the outstanding amounts, the repayment schedules, and the continuation of the exceptional occurrences every six months after SURE becomes available. (Art. 14.)
Prepared by Zeynep Timocin Cantekin, Law Library intern, under the supervision of Jenny Gesley, Foreign Law Specialist