Covid-19 and Government Recovery Plans

The EU’s agreement on a €750 billion recovery fund coupled with a new seven-year €1.07 trillion budget set an unprecedented bar for a transnational stimulus measure. It is a milestone moment for the European Union which aims to channel a large part of it in grants to countries most impacted by the effects of the coronavirus pandemic.

Our Public Policy Teams in London, Dublin, Brussels, Berlin, UAE, Saudi Arabia and Johannesburg are helping clients navigate Government recovery plans and below is a snapshot of these plans.  Should you wish to explore further or need advice on how to navigate these systems, please do get in touch.

From next week, our Covid-19 and Government Recovery Plans newsletter will take a hiatus during the summer break and while national Governments go into recess. We will return in the Autumn with more updates.

UK

Exit Strategy for Business

• The Prime Minister Boris Johnson is considering changing travel and work advice for England, potentially allowing travel on public transport for non-essential journeys and giving employers greater discretion to start bringing employees back to offices
• While recent weeks have seen the Government give timetables for restaurants, pubs, hairdressers, gyms, beauticians and other leisure businesses to reopen across England some sectors remain under review and are worried about the long-term impact on their businesses and employees
• With the furlough scheme winding down, there is increasing pressure from industry on the Government to outline its plans for soft play centres and nightclubs to reopen or give those sectors some sectoral support to prevent business closures and job losses
• Face coverings are mandatory in shops in England from this week, though the Government faced criticism in the delay to publish detailed guidance

Stimulus and Economic Measures

• The Treasury has reported that more than 30,000 restaurants, bars and cafes have signed up to the Eat Out to Help Out Scheme, providing Government-backed discount on meals in an effort to stimulate the hospitality sector
• To support the health sector during the winter as it manages usual seasonal pressures and challenges as well as a potential second wave of coronavirus, the Government has announced additional funding of £3 billion for the NHS in England
• There are expectations that online retail will continue to go from strength to strength with Amazon announcing 15,000 new full and part-time jobs and delivery company Hermes creating more than 10,000 jobs
• The increasing trend toward internet shopping is expected to have an impact on traditional high street retailers with retailers Marks and Spencer, Boots and John Lewis announcing job losses

EU

Stimulus and Economic Measures

• After one of the longest summits in EU history, European leaders finally reached an agreement on the COVID-19 recovery package – “Next Generation EU”.
• The package includes €750 billion in grants and loans earmarked for helping Member States mitigate the impact of the pandemic on their economies. This represents the biggest joint borrowing effort ever agreed by the EU.
• The deal includes a €390 billion programme of grants to Member States hardest hit by the pandemic. Italy and Spain are expected to be the main recipients of those funds. A further €360 billion in low-interest loans will be available to all Members of the bloc.
• In order to access the funds, recipients will have to submit spending plans to the European Commission, and a majority of states will be able to block projects if deemed necessary.
• Technical negations on some aspects of the package are still pending as is the formal ratification of the EU Budget by the European Parliament.
• According to a new report, European banks can face up to €800 billion in loan losses and significant losses of revenue if the virus returns with a severe second wave of infections later in the year.

Germany

Exit Strategy for Business

• Number of infections remain at a low level: According to the Robert Koch Institute, 202,799 people in Germany have been proven to be infected with the coronavirus (as of 22 Jul). That is 454 more than the day before. The number of deaths rose by seven to 9,095 in total
• High approval for coronavirus measures: several recent surveys show that there continues to be a high level of support among citizens for the measures taken to tackle coronavirus in Germany
• German labour market will take up to three years to recover: At present, 2.85 million people in Germany are without jobs, it is estimated that almost 640,000 of them are as a result of the pandemic
• German companies perform well in international comparison: According to the bank HSBC, Germany has (at 53%) the lowest share of companies that have been severely impacted by the pandemic

Stimulus and Economic Measures

• €45 million for Covid-19 research: The German government has announced increased funding of the research into coronavirus to the tune of €45 million euros. The first research projects aimed at gaining a better understanding of the virus have already started
• One out of five consumers spend less: The COVID-19 pandemic is continuing to curb consumer spending in Germany. According to recent research on consumer behaviour, 20% of the German population currently deliberately spends less money than usual when shopping

Ireland

Exit Strategy for business

• The Irish Government has revised its foreign travel advice, announcing a ‘Green List’ of countries where foreign travellers are exempt from the mandatory 14-day self-isolation on arrival in Ireland. The policy remains for all other countries.
• There is a total of 15 countries on the list: Malta; Finland; Norway; Italy; Hungary; Estonia; Latvia; Lithuania; Cyprus; Slovakia; Greece; Greenland; Gibraltar; Monaco; and San Marino. The list will be reviewed on a fortnightly basis, based on advice from officials including public health experts.
• Ireland remains in Phase 3 of the Roadmap for Reopening Society and Business, with the new provisional date for moving into the next Phase set for 10 August.

Stimulus and Economic Measures

• The coalition Government has agreed a new stimulus package to help fund and incentivise growth in the economy as it emerges from restriction in place due to COVID-19. It has agreed to set aside €5.2 billion in tax and expenditure measures
• As the single largest expense on the exchequer since the pandemic hit, the Pandemic Unemployment Payment (PUP) will be reduced and also split into three separate rates from September. The PUP Scheme will be extended until April 2021.
• Business-specific initiatives announced in the package include: 0% interest for first year of SME loans; the Restart Grant for Enterprises is being extended and expanded; the waiver of commercial rates extended until end-September 2020; and a €2 billion COVID-19 Credit Guarantee Scheme.
• The Government has set aside €200 million investment in training, skills development, work placement schemes, recruitment subsidies, and job search and assistance measures
• In relation to safeguarding jobs and reskilling the labour force, the Government has also agreed: €25 million Investment in Life Sciences: €10 million to be provided under a New Green Enterprise Fund: and €20 million Brexit fund to help SMEs to prepare for new customs arrangements, among other initiatives.

KSA

Exit Strategy for business

• Saudi Arabia continues to report an increase in COVID-19 cases, bringing the total up to 255,825 confirmed cases and 2,557 deaths
• The Saudi Ministry of Health has revealed that it is now conducting more than 65,000 COVID-19 tests per day, up from 1,000 daily tested when the virus broke out in the Kingdom
• Saudi Arabia has announced that transporters carrying illegal pilgrims will risk a 15-day imprisonment and a fine of up to SAR 10,000
• Saudi Arabia’s Riyadh Municipality has shut down 648 businesses over the past week for violating COVID-19 health protocols

Stimulus and Economic Measures

• Saudi Arabia, alongside other G20 members, is considering the prospect of widening debt relief for COVID-19-hit poor countries in the second half of 2020
• Saudi Arabia continues with its initial plans to launch the Qiddiya project within its schedule despite the challenges posed by the global crisis
• Saudi Arabia has been featured in a COVID-19 Response Report (CRR), developed by Oxford Business Group and produced by Riyad Bank. The report provides an in-depth analysis of Saudi Arabia’s swift introduction of integrated stimulus and support measures as soon as the crisis reached the Kingdom, and their part in enabling local banks to bolster the economy

South Africa

Exit Strategy for business

• South Africa now has the 5th highest number of Covid-19 infections in the world with 408,052 cases – half the cases in Africa
• President of South Africa Cyril Ramaphosa has announced that all public schools will be closed for four weeks from 27 July to 24 August. The national school nutrition programme will continue during this time. The current academic year will be extended beyond 2020
• The Competition Commission has investigated over 800 companies relating to excessive pricing. It has reached settlements with more than 28 companies
• Ramaphosa has signed a proclamation to investigate any allegations of corruption, fraud and the mismanagement of funds, including abuse of food parcels distributions and collusion, across any sphere of state
• Restaurants across the country took to the streets on Wednesday in protest of the latest lockdown restrictions, including the ban on alcohol sales
• Minister of Labour and Employment Thulas Nxesi has published a new directive focusing on employees who contract COVID-19 in work-related exposures. The new directive specifically deals with COVID-19 disability and death claims from the Compensation Fund under the Compensation for Occupational Injuries and Diseases Act (Coida)
• The Deputy Minister of Tourism, Fish Mahlalela, said that foreign tourists may be allowed to travel to South Africa by the start of 2021 and that domestic level travel was likely to open in late September or early October

Stimulus and Economic Measures

• South African inflation is at the lowest level in almost 16 years – at 2.1% in May 2020, inflation dropped below the South African Reserve Bank’s (SARB) target band for the first time since 2005
• The SA Reserve Bank has cut the repo rate by 275 basis points this year. Economists forecast a further cut of an additional 25 basis points, lowering the repo rate to 3.5%, which would be the lowest since it was introduced in 1998
• The economy entered the 80th month of a weakening cycle (the longest downward cycle since 1945) in July 2020, according to data in the SARB’s Quarterly Bulletin released on 16 July
• South Africa’s foreign direct investment (FDI) inflows rose in the first quarter of 2020, to R29.0 billion compared to inflows of R10.5 billion in the final quarter of last year, as local competition authorities approved PepsiCo’s $1.7 billion takeover of Pioneer Food Group

UAE

Exit strategy for business

• The UAE has reported a total of 57,498 confirmed cases and 341 deaths to date
• The UAE Ministry of Health has affirmed its aim to continue expanding the scope of testing nationwide to facilitate the early detection of Covid-19 cases and carry out the necessary treatment
• The country has launched a virtual registration office for nationals and residents across the country who wish to volunteer for Phase III clinical trials of the inactivated vaccine
• The Roads and Transport Authority of Dubai has confirmed that the facilities of taxi operators in the emirate are in compliance with the COVID-19 precautionary measures in place. However, 643 violations have been registered in relation with the physical distancing of passengers
• Nursery owners in the UAE have requested the authorities to issue guidelines for their reopening in September
• Jewelry shops are now allowed to open in Abu Dhabi and will have to introduce new safety measures as part of the emirate’s precautionary efforts

Stimulus and Economic Measures

• The UAE has sent an aid plane carrying 7.5 metric tons of medical supplies and approximately 7,500 medical professionals to South Sudan, in an effort to contain the spread of the virus in Africa
• Global financial experts are warning of high rates of unemployment and debt in the Middle East, especially in the GCC countries, and are recommending more stimulus plans and flexibility in fiscal policy to speed up recovery