Public Policy

October 16, 2020

Covid-19 and Government Recovery Plans

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This week saw the number of Covid-19 cases accelerating across Europe and the Middle East as Governments once again move to introduce restrictions on the public and businesses aimed at slowing the spread of the virus.

To help businesses and organisations respond to an ever-changing policy landscape, our Public Policy Teams in London, Dublin, Brussels, Berlin, UAE, Saudi Arabia and Johannesburg are helping clients navigate specific Government recovery plans and below is a snapshot of those plans.

We will no longer be running this bi-weekly newsletter, but should you wish to explore further or need advice on how to navigate these systems, please do get in touch.

Public-Policy_COVID19-Newsletter-dividers_UK

Exit Strategy for Business

  • Prime Minister Boris Johnson has announced a new three tier system for England with alert levels of medium, high and very high depending on infection rates. Each tier dictates restrictions on public interactions and business operations.
  • The very high alert level will direct people not to socialise with other households both indoors and in private gardens, while bars and pubs will be closed unless they can operate as restaurants. Residents will also be advised against travelling in and out of regional geographies. Non-essential shops, schools and universities will remain open.
  • Already impacted by the 10pm curfew, the UK hospitality industry has claimed it will take legal action to stop new local lockdown rules coming into place.

Stimulus and Other Economic Measures

  • Chancellor Rishi Sunak has announced new financial support to for businesses forced to close because of Covid-19. Firms whose premises are legally required to close will receive grants to pay the wages of staff who cannot work, with the Government paying two thirds of each employee’s salary (67%) up to a maximum of £2,100 a month.
  • Culture Secretary Oliver Dowden has announced that more than 1,300 arts venues and organisations are to receive up to £1m each as part of the £257m funding from the Government to help the cultural sector through this crisis.
  • New figures show the UK economy grew by 2.1% in August, which was below expectations. Growth in August was slower than the expansion seen in both June and July and the UK economy remains 9.2% smaller than it was before the pandemic.
  • Police forces and local councils in England will receive additional funding of £60 million to step up their enforcement of coronavirus rules.

Public-Policy_COVID19-Newsletter-dividers_EU

Exit Strategy for Business

  • On 9 October EU member states agreed new measures to harmonise travel rules. A Swedish-based EU agency will develop a system to consistently designate European regions as green, amber, red, or grey (insufficient data). This status will be updated on a weekly basis.
  • All states are then expected to impose the same rules and restrictions for travellers from those zones based solely on the level of risk.
  • Some Bulgarian, Cypriot, Greek, German, Italian, Nordic and Baltic regions were the only ones that would qualify as green, for now.
  • The Council Recommendation formally adopted by Member States on 13 October on a coordinated approach to the restriction of free movement in response to the Covid-19 pandemic, will address the following issues:
    • a common mapping system based on a colour code (green, orange, red, grey)
    • common criteria for Member States when deciding whether to introduce travel restrictions
    • more clarity on the measures applied to travellers from higher-risk areas (testing and self-quarantine)
    • providing clear and timely information to the public.

Stimulus and Other Economic Measures

  • Member States, during a meeting of Permanent Representatives (COREPER) reach an agreement by qualified majority on the negotiating terms they will adopt in discussions with the European Parliament on the Recovery and Resilience Facility, the budget instrument at the base of the Recovery Plan.
  • The legal text outlines the operation of the €750bn facility and sets the minimum investment thresholds for environmental and digital transitions.
  • The European Commission on Tuesday 13 October announced that, it would be extending the Temporary Framework for state aid put in place during the coronavirus pandemic.
  • All sections of the Temporary Framework are prolonged for 6 months, until 30 June 2021, and the section to enable recapitalisation support is prolonged for a further 3 months until 30 September 2021.
  • The European Commission also adapted conditions that allow for the exit of governments from the recapitalisation of enterprises where they were shareholders.

Public-Policy_COVID19-Newsletter-dividers_Germany

Exit Strategy for Business

  • Highest increase within one day since the outbreak of the pandemic: According to the Robert Koch Institute (RKI), 341,223 people in Germany are infected with the coronavirus (as of October 15) – 6,638 more than the day before
  • Federal and state governments decide hotspot strategy: In the event of more than 50 new infections per 100,000 inhabitants in a week, there will be extra obligations to wear to masks at public spaces, a curfew at 11pm and strict limitations on gatherings with family or friends.
  • The Chancellor appeals to citizens after conference between federal and state governments: “We are in a phase of the pandemic that is serious,” the Chancellor Angela Merkel stated and called the citizens to follow the rules: keep distance, follow the hygiene protocol, wear a mask, use the Corona warning app and ventilate rooms regularly.
  • Minister of health Spahn calls for influenza prevention: To prevent the overburdening of the healthcare system the ministry of health recommends the public vaccinate against influenza.

Stimulus and Economic Measures

  • Hospitals are strengthened: Hospitals will receive three billion euros for an investment program from the Hospital Future Law, after the Bundesrat approved the measure. The law also provides for the extension of the entitlement to child health benefits and a special allowance for nursing staff in hospitals.

Public-Policy_COVID19-Newsletter-dividers_Ireland

Exit Strategy for business

  • The Taoiseach Micheál Martin has announced that all counties in Ireland will move to Level 3 restrictions from midnight 15 October 2020 due to the rise in Covid-19 rates. The public has been asked not to visit other households, unless it is for essential reasons, like providing care to a child or to an elderly or vulnerable person.
  • Additionally, counties Donegal, Monaghan and Cavan will move to Level 4 restrictions which includes further restrictions on commercial practices. While essential retail and businesses can remain open, all other retail and personal services must close.
  • The restrictions are due to remain in place until 10 November, although the measures will be reviewed regularly in light of up-to-date rates of Covid-19.

Stimulus and Economic Measures

  • Budget 2021 was announced on Tuesday, 13 October 2020, and saw the Government provide for unprecedented funding packages for sectors worst hit by the pandemic.
  • A new COVID Restrictions Support Scheme (CRSS) has been launched. Qualifying businesses can apply to Revenue for a cash payment of maximum €5,000 per week. The scheme is aimed at those in the accommodation, food and arts, recreation and entertainment sectors. The scheme will run from 13 October 2020 until 31 March 2021.
  • A €180m Sustaining Enterprise Fundfor firms with 10 or more employees in the manufacturing and international services sectors to be operated by Enterprise Ireland, providing advances of up to €800,000 which are only repayable when a business returns to good financial health.
  • A new €16m support package has been launched to help pubs, bars and nightclubs. Supports include, A 40% top up on the Restart Grant Plus, Waiver of court fees and associated excise and stamp duties for the renewal of pub and other liquor licences in 2020.
  • Cross-border companies can avail of professional advice on COVID-19 challenges up to the value of €2,250 from InterTradeIreland’sEmergency Business Solutions. €2,800 in consultancy support is available under the E-Merge programme, to help cross-border businesses develop online sales and eCommerce solutions.

Public-Policy_COVID19-Newsletter-dividers_KSA

Exit Strategy for Business

  • Saudi Arabia exceeded 500 daily Covid-19 infections once again on 15th October. Moreover, the total number of Covid-19 confirmed cases in Saudi Arabia reached 340,590 as of 15th October, with total recoveries standing at 326,820, bringing total active cases to 8,662.
  • Saudi Arabia’s Municipality shut down 329 business in Jeddah for violating the measures put in place to contain the spread of Covid-19.
  • The Saudi Ministry of Hajj and Umrah announced that 250,000 domestic pilgrims will be allowed to perform Umrah in the second phase of the gradual resumption of the pilgrimage.
  • Saudi Arabia recorded an overall economic contraction of 7% in Q2 of 2020 due to impact of Covid-19 on the Kingdom’s economy, while unemployment hit a record high of 15.4%.
  • Saudi Arabia has decided to continue with distance learning for the remainder of the first semester of the current academic year

Stimulus and Economic Measures

  • Earlier this month, Saudi Arabia introduced new incentives to reverse the contractionary effects of earlier fiscal measures on real estate and stimulate this sector, which represents a significant component of the Saudi economy. King Salman’s order repealed the value added tax (VAT) on real estate transactions and replaced it with a lower tax. It also raised the threshold for first-home buyers and exempted inputs for real estate developers from tax.
  • Saudi based Bab Rizq Jameel Microfinance announced on 3 October an initiative to support the measures taken by the government to mitigate the impact Covid-19 on the economy and citizens. The company postponed customer payments and extended the payment delay programme as part of the new initiative.
  • The IMF revised its estimates for the Saudi economy. It is now expected to slow by 5.4 per cent this year — significantly less than the 6.8 per cent drop the Fund predicted in the summer. The IMF said Saudi growth would be flat next year

Public-Policy_COVID19-Newsletter-dividers_SA

Exit Strategy for Business

  • The range of forecasts for South Africa’s economic growth are wide, but there is some consensus on how bad the contraction will be.
  • The Bloomberg consensus is at -7.6% while the Reuters consensus is at -8.0%. The International Monetary Fund projects a contraction of 8.0%
  • The South African Reserve Bank (SARB) Monetary Policy Review (MPR) released this week showed that the bank expects the economy to return to 2019 levels only after 2022. It should be noted that economists are calling this unrealistic
  • State power utility Eskom has had the most severe load shedding in 2020 than in any other year since load shedding started in 2008. Expectations are that this will remain a binding constraint – independent of the recovery in external demand – on domestic production for at least the next two years.

Stimulus and Economic Measures

  • The South African government has announced its South African Economic Reconstruction and Recovery Plan. Much of the economic reconstruction and recovery plan is an amalgamation of existing and long- standing government policy. Infrastructure remains central to economic growth with a focus on energy security, not just in terms of renewables and gas, but also with a nuclear build back on the cards. The localisation of manufacturing to support industrialisation, township economies and mass public employment programmes are also core to the plan.
  • Finance Minister Tito Mboweni has asked to postpone the tabling of his Medium-Term Budget Policy Statement (MTBPS) by a week over an intense balancing act in government between spending and expenditure.
  • President Ramaphosa has announced that he will be extending the special Covid-19 grant.

Public-Policy_COVID19-Newsletter-dividers_UAE

Exit Strategy for Business

  • The UAE recorded the highest number of Covid-19 cases to date on 14 October, with 1,431 infections, bringing the total cases to 110,039. Furthermore, the UAE registered 100,000 Covid-19 recoveries bringing the total active cases to 8,150.
  • The UAE commenced phase III of the Russian Covid-19 vaccine clinical trials on 12 October, while ending the Chinese Covid-19 vaccine trial on 8 October.
  • Sheikh Maktoum Bin Mohammad announced that government services in Dubai will be transformed, in order to serve the customers more effectively and to improve the quality of life for residents through the usage of technology.
  • UAE resumed issuing entry and work permits for employment on 6th October. However, measures to contain the spread of Covid-19 will be taken, including quarantine periods, if necessary.

Stimulus and Economic Measures

  • Israel Export Institute and Dubai World Trade Centre signed a partnership agreement concerning conferences and exhibitions to enhance trade developments between UAE and Israel.
  • Emirates Development Bank launched the National Supply Chain Finance platform on 11 October. The platform was launched to help UAE’s businesses and start-ups gain easy access to capital during the Covid-19 pandemic.
  • Emirates Angels Investors Association launched on 12 October to boost the UAE’s economic competitiveness and accelerate the growth of SMEs.
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