European countries in action to rescue the economy
Tax moratoriums, payment extensions on social charges, loan guarantees and wage subsidies for workers who cannot work or move to part-time roles. These are the main measures governments take across Europe to shield companies and households from the impact of the coronavirus outbreak.
In our blogpost we provide a brief overview of the international situation, based on the overview published on Financial Times.
The government provides loans to all companies hit by the coronavirus pandemic, from SMEs to blue-chip. Berlin is expanding its programme of export credits and other guarantees to help companies in crisis. Companies affected by coronavirus can also defer tax payments.
The German administration is also expanding a government-subsidised scheme to compensate workers who are sent home by their employers during an economic crisis, known as short-time work allowance. According to The Guardian’s report on this topic, this is the most promising action any countries can take, considering that
short-time work allowance costs hardly anything, because it prevents the losses that would follow from increased real unemployment. All countries should be replicating this part of Germany’s policy to prevent job losses.
French president has promised unlimited budgetary support for companies and employees affected by the coronavirus pandemic, including corporate tax deferrals and support payments for workers. The French state has been committe to provide guarantees for bank loans to businesses, as well.
Other moves include “sick leave” payments to parents who are not ill but have to stay at home to look after their children because schools are closed.
In addition to supporting the Italian health system and civil protection agency, the main measures are expected to include one-off payments of €500 per person for the self-employed, government support for companies paying redundancy payments to their staff, a freeze on any worker lay-offs, and a cash bonus for Italians still working during the lockdown.
The package is also expected to include loan guarantees for businesses hit by the crisis and a moratorium on loan and mortgage payments.
The government’s plan includes state loan guarantees for businesses, especially for small and medium-sized companies.
The decree also makes it easier for people to be temporarily suspended from work, rather than laid off, and to retain all of their benefits. Some social security payments will be suspended and there will be a special support to help vulnerable people and those depending on social services.
London has been also committed to provide loan guarantees, direct lending from the Bank of England for large companies and a one-year abolition of property taxes for all companies in affected sectors.
Grants will be available for smaller companies.
According to the article published in The Guardian, firms employing fewer than 250 employees that lose out because staff are off sick would be supported, also.
A series of cheap loans would also be on offer while smaller firms in some of the hardest-hit industries, including retailers and museums, would not have to pay business rates.