The new European employment support instrument (SURE), part of the triple safety net ofover half a trillion euros from the EUTo cope with the costs of the Covid-19 pandemic, it could also be operational from June 1, the date that EU leaders have set as a target.
The permanent ambassadors of the EUhave closed this Friday a “political agreement”which will allow the Twenty-Seven to access loans on favorable terms to finance ERTE and other similar measures. The economic vice president of the Government,Nadia Calviño, has confirmed the intention of the Spanish Government to use this new financing channel to finance part of the cost of the measures against unemployment.
The new instrument will allow European governments, such as that of Spain,ask the EU for help to finance the “sudden and severe increase” in national public spendingas of February 1, 2020, through ertes and other similar measures, including those aimed at self-employed workers as well as others related to health.
To provide that help, lThe European Commission will have to raise the funds in the international capital markets. The loans will be backed by the EU budget and guarantees -25 billion in total- that the Member States will have to provide based on their Gross National Income.
“It is very good news. It is the embryo of job reinsurance that our government has been defending from day one, “Calviño said during a virtual videoconference before participating in the Eurogroup this Friday.“From the first moment we have supported the creation of this instrumentthat adapts to the new mechanism of support to the ertes in Spain. Our intention is to use this instrument as one of the ways of financing the costs derived from the important public support that the temporary employment regulation files entail, “he explained.
According to the stability program submitted a few weeks ago to the European Commission, lERTE will cost the Spanish coffers this year 17,894 million euros towhich add another 981 million to finance the extraordinary benefit for cessation of activity for the autonomous communities. The vice president has not given figures on the amount that Spain could choose but does rule out that it may generate tensions or controversy between. “I cannot imagine that there is not someone who considers it positive to use an instrument aimed at financing employment regulation files, which has been one of theMore effective mechanisms to try to mitigate the negative impact of the health emergency“he has alleged.
The SURE program, which will be open to all Member States,will be temporaryand it will be operational until December 31, 2022, although its life could be extended at the proposal of the European Commission for periods of six months if the serious economic shocks caused by the coronavirus pandemic continue.
As announced by the Council, governments will formally adopt the regulation on Tuesday May 19 and once governments provide the agreed guarantees – some need ratification by their parliaments like Finland – it will be operational.Something that could happen for “the summer”, from July, as indicated by the commissioner for economic affairs, Paolo Gentiloni, after the Eurogroup.
“Beyond the public health implications, the outbreak has also caused a major economic and social disruption. Many companies have to rely on public support to preserve jobs.SURE will be a vital safety net to protect jobs and workerss, as it will ensure that member states have the necessary means to finance measures to combat unemployment and loss of income, as well as some measures related to health, “said the Croatian Minister of FinanceZdravko Maric, on one of the three elements of the emergency network that also includes loans from the European Stability Mechanism (ESM) at favorable conditions to finance health spending as well as guarantees from theEuropean Investment Bankfor the companies.
Precisely, Calviño has reiterated this Friday thatSpain’s intention is not to go to the new MEDE line of credit, of 240,000 million euros, which this Friday has also been approved by the fund’s board of governors (Eurona’s economy ministers). An instrument that will allow EU countries to borrow fromup to 2% of GDP lor that in the case of Spain it means around 25,000 million euros. “We will make a decision based on the general interest” but“we are financing ourselves under very beneficial conditions”, with an average cost of “0.3%”, explained the reasons for avoiding this option at the moment.