How Europe Will Relax Handout Rules to Allow State Bailouts (1)

The European Union is loosening its curbs on state handouts, allowing cash injections and other government support to thousands of companies hit by a virus-induced recession, according to draft guidelines the regulator plans to adopt this week.

European government budgets must stand in the front line to offer “swift and effective action” to help companies suffering economic consequences of the Covid-19 outbreak as real GDP growth risks being “substantially negative” this year, according to the document obtained by Bloomberg News.

Margrethe Vestager, the EU’s competition chief, said Tuesday that the guidelines had been sent to governments for their ...