The European Union has announced multi-billion dollar investment initiative and says it will provide "maximum flexibility" on state aid to help Member States cushion the blow from the coronavirus outbreak.

"We will do whatever is necessary to support the Europeans and the European economy," said EU Commission President Ursula von der Leyen, while outlining the plan in Brussels on Friday.

Von der Leyen said a 37 billion euros ($41 billion) Coronavirus Response Initiative will be set up with money going to support the healthcare sector, the labor market and small- and medium-sized businesses from all affected sectors.

The Commission also committed to bending rules around state aid and budget deficits. This will free up Member States to unleash aid packages without worrying about getting in trouble with Brussels.

"Member States should be encouraged and feel comfortable to take all necessary measures to support the most affected sectors," said Von der Leyen.

SME Support

Valdis Dombrovskis, the EC's executive vice president, also outlined measures to help small- and medium-sized businesses, which have been severely impacted by the outbreak.

He said 1 billion euros ($1.1 billion) will be redirected from the EU budget as a guarantee to the European Investment Fund to incentivize banks to provide liquidity to SMEs and mid-caps. The Commission said this will help at least 100,000 European SMEs and small mid-caps with about $8.9 billion of financing.

The Commission also said it will provide credit holidays to the existing debtors that are negatively affected.

"These are very challenging times, but by taking the right steps at the right time, we will overcome this shock," said Dombrovskis during the press conference.

Unilateral steps member states can take

The Commission also outlined ways governments can help without needing state aid approval including providing wage subsidies, suspending corporate tax payments or the payment of VAT. In addition, member states can grant financial support directly to consumers, for example for canceled services or tickets that are not reimbursed by the operators.

For areas where EU approval is needed, the Commission pledged to expedite the process.

According to the Commission, the Danish government submitted a plan to compensate companies that were forced to cancel events hosting more than 1,000 people. Margrethe Vestager said that scheme was approved within 24 hours.

"It is both lives and livelihoods that are at stake," said Vestager, who is the executive vice president of the European Commission in charge of the Europe Fit for the Digital Age branch.