The European Commission -- the executive arm of the European Union -- said here on Tuesday that it has authorized an Italian scheme aimed at helping firms suffering financial difficulties because of the credit squeeze in the current economic crisis.

The measure allows national, regional and local authorities to grant aid in the form of reduced interest rates on loans concluded by 31 December 2010.

"The scheme meets the conditions of the Commission's Temporary Framework for state aid measures, which gives Member States additional scope to facilitate access to financing in the present economic and financial crisis," said the Commission, adding that the scheme was limited in time and only applies to companies that were not in difficulties before 1 July 2008.

"The Italian measure is aimed at improving the liquidity of companies affected by the current economic downturn, without causing undue distortions of competition," said Competition Commissioner Neelie Kroes.

"A significant reduction in the cost of loans can be an effective way of encouraging business investment and economic recovery," she said.

Source:Xinhua