European Union antitrust regulators yesterday approved a 2-billion-euro Greek government plan that aims to subsidize guarantees and offer reduced interest rates to businesses strangled by a liquidity squeeze. The Greek scheme regards state guarantees for investment and working capital loans contracted by companies through the end of December 2010, with the maximum duration of the guarantees capped at five years. The European Commission, tasked with ensuring that state aid does not distort competition in the 27-country European Union, also endorsed a separate plan by Greek authorities to grant aid with reduced interest rates on loans to hard-hit companies. The loans must be concluded by the end of 2010. «A significant reduction in the cost of loans can be an effective way of encouraging business investment and economic recovery,» Competition Commissioner Neelie Kroes said in a statement. The European Union executive body has approved similar schemes drawn up by other European countries for their businesses. Greek Economy and Finance Minister Yiannis Papathanassiou said the scheme does not apply to firms that were already in difficulty before July 1, 2008, or to those that will have laid off staff by the end of 2010. «This (aid) is securing the survival and continuing operation of thousands of businesses, while supporting the employment and income of a large number of workers,» the minister said in a statement. The scheme can be applied to companies of all sizes. Greek businesses have been taking up loans at a falling rate, as the economy decelerates to its slowest pace since 1993. Data from the Bank of Greece, the country's central bank, showed that lending to businesses in May decelerated to 11.8 percent year-on-year from 12.2 percent in the previous month. It stood at 18.7 percent in December.