Covid-19 and Government Recovery Plans

We are nearing six months since the WHO declared coronavirus a global pandemic, and Government’s across the globe are still battling to find ways of transitioning from rescue mode to post-Covid recovery. To help businesses and organisations respond to an ever-changing policy landscape, our Public Policy teams in London, Brussels, Berlin, Dublin, Riyadh, Johannesburg and Dubai are helping clients navigate specific Government recovery plans and below is a snapshot of those plans.

Should you wish to explore further or need advice on how to navigate these systems, please do get in touch.

Going forward, our Covid-19 and Government Recovery Plans newsletter will be sent out every second week and on a Friday.

UK

Exit strategy for business

• With schools having re-opened across the country, the Government is encouraging people to return to work, especially in Central London which has been economically hit badly
• Companies and building operators are balancing making workplaces ‘Covid-safe’, while there remain calls for greater flexibility among employees. A number of large UK employers have indicated they will not ask staff to return to the office until 2021, while others have said home working will become a more permanent fixture
• Independent and high street food retailers in business districts continue to struggle, with high street coffee chain Costa announcing 1,650 jobs are at risk and sandwich chain Pret A Manger cutting more than a third of its workforce
• Online retailers are, however, seeing a boost with Amazon announcing it will create a further 7,000 jobs this year – on top of the 3,000 roles it has already added in 2020 – to meet the growing demand

Stimulus and economic measures

• The Government’s ‘Eat Out to Help Out’ Scheme has now ended, and its furlough scheme is winding down. This has led some in the business community to call for the Government to provide economic stimulus for some key sectors
• Health Secretary Matt Hancock has announced the Government will spend £500m to support trials of a 20-minute Covid-19 test and explore the benefits of repeat testing
• Work and Pensions Secretary Therese Coffey has unveiled the ‘Kickstart’ scheme for under-25s. With funding of £2 billion behind it, the scheme will allow the Government to pay wages, National Insurance and pension contributions for a six-month period
• Prime Minister Boris Johnson and Chancellor Rishi Sunak have resisted calls to follow their international counterparts and extend the Job Retention Scheme. The furlough scheme has been slowly winding down since July and is due to finish in October

EU

Exit strategy for business

• EU Member State representatives met on Wednesday to discuss plans to harmonize travel restrictions across the EU. The European Commission and the German Presidency are advocating the introduction of a common colour-coding system and consistent health measures upon return from high-risk areas across the bloc, to avoid inconsistencies and unilateral border closures by EU Member States

Stimulus and economic measures

• The European Commission has presented proposals to grant loans totalling €86.3 billion to 16 Member States under the SURE programme, one of the principal pillars of the EU’s coronavirus response intended to support Member States in covering the costs of increased expenditures to protect jobs.
• EU Economy Commissioner Valdis Domsbrovskis confirmed that EU national budget rules for Member States will remain suspended until at least 2022

Germany

Exit strategy for business

• The number of corona infections stabilizes: After the infection numbers in Germany rose sharply in recent weeks, the numbers have stabilized in the last few days. According to the Robert Koch Institute, 244.855 people in Germany have been proven to be infected with the coronavirus (as of 2 September)
• Almost half of the registered infections come from travel returnees: A high number of infections are brought to Germany by travel from abroad. According to the Robert Koch Institute, another important reason for the increase in infections is the large number of smaller outbreaks in localised districts
• Ban on major events extended: Ban on major events is extended by the German government until 31 December
• Fines for refusing to wear masks: Persons who do not keep to the masks and hygiene protocols can be punished with a fine of at least €50, under country wide sanctions.
• New rules for travel returnees: The quarantine and testing obligation remain in place, but free tests inbound travellers will be abolished as of 15 September
• More than 80 percent of Germans support Corona measures: According to a survey, an overwhelming majority of Germans support the existing Corona requirements. More than 80 percent of those questioned in a Forsa survey were satisfied with the corona measures or even considered them not far-reaching enough

Stimulus and economic measures

• German Economy recovering: Although the gross domestic product is expected to fall by 5.8 percent this year due to Covid-19, it is expected that the recession already bottomed out in May. For the coming year, the German government predicts growth of 4.4 percent
• Chancellor defines three pandemic targets: According to the head of government, three goals are of special importance for the upcoming months: 1) Education (day-care or schools) – must remain functioning; 2) ensure economic activity continues; and 3) maintain social cohesion, in as far as possible
• Government decides on protective shield for hospitals: The German government wants to drive forward the modernization of hospitals with investment aid worth billions. The fund combines federals as well as state resources
• Aid for small and medium-sized enterprises is only partially effective: According to a media report, the federal government’s multi-billion-euro rescue package for small and medium-sized companies has so far “hardly got off the ground”. Only one percent of the planned funds totalling 24.6 billion euros has so far been paid out to companies, reports the “Augsburger Allgemeine” newspaper

Ireland

Exit strategy for business

Due to a rise in cases of Covid-19, the following measures were announced and will be in place until 13 September 2020, when they will be reviewed in light of current statistics:

• Social visits to homes, both indoors and outdoors, should be limited to a maximum of 6 visitors from no more than 3 households
• Other indoor gatherings and events are now limited to 6 people from no more than 3 households
• Outdoor gatherings and events are limited to 15 people
• Sporting events and matches can only take place behind closed doors
• Restaurants and pubs that serve food have to close by 11.30pm and can have a maximum of 6 people at a table
• Face coverings remain mandatory on all public transport, shops and retail settings, these measures will be in place until at least 5 October 2020
• The government is still advising against all non-essential overseas travel. People visiting or returning to Ireland must complete a Passenger Locator Form and they are also asked to restrict their movements for 14 days

Stimulus and economic measures

• The standard rate of VAT was reduced from 23% to 21%, on 1 September 2020 until 28 February 2021.
• Covid-19 related VAT and payroll tax debts, due from 1 March 2020 to the date when sectoral restrictions are lifted, will be deferred for a period of 12 months. There will be no debt enforcement action taken by Revenue and no interest charge accruing for warehoused debit.
• A Covid-19 Online Retail Scheme is open to retailers employing over ten people. Grants ranging from €10,000 to €40,000 will be awarded under the competitive scheme to retailers seeking to improve their existing online capability
• A new €12m Enterprise Centre Fund has been launched to help enterprise centres impacted by the Covid-19 pandemic. Grant funding of between €10,000 and €150,000 is available
• The Covid-19 Adaptation Fund is available to tourism and hospitality businesses to help with the costs of adapting your premises or operations for re-opening. Grant funding of between €500 and €15,000 is available. Closing date for applications is 8 October
• A new €16m support package has been launched to help pubs, bars and nightclubs. Support includes: 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; and Waiver of excise duty on on-trade liquor licences on renewal in 2020

KSA

Exit strategy for business

• Saudi Arabia has reported a total of 317,487 confirmed cases, 3,956 deaths and 292,510 recoveries to date
• International flights remain suspended until further notice, except for return flights for residents and expats
• Saudi General Authority for Civil Aviation, GACA, has approved the UAE’s request to allow all flights over the Kingdom’s airspace.
• 600,000 government employees in Saudi Arabia return to offices, with 25% of employees permitted to work from home

Stimulus and economic measures

• Saudi Arabia’s KSRelief has ramped up humanitarian support for Yemen to ensure patients receive required treatment.
• The Saudi Ministry of Human Resources plans to hire experts to develop the overseas recruitment system of foreign workers to revise policies to meet the needs of the national economy
• Saudi food delivery workers are now covered by Covid-19 relief packages, according to a royal decree issued by King Salman Bin Abdulaziz

South Africa

Exit strategy for business

• South Africa is on Level 2 lockdown, with lockdown regulations now permitting inter-provincial travel, the sale of alcohol and tobacco and the opening of restaurants. A curfew is still in place and international travel is prohibited
• Tourism Month is celebrated in September, this provides a heightened month-long focus on the importance of the sector to the RSA economy
• SA Broadcasting Corporation, Post Office and other state companies have asked for R10 billion in bailouts. This comes after the Finance Minister announced that over the past 2 decades the government has already spent R187.4 billion bailing out state companies.
• SA’s Covid-19 recovery is at a steady rate of 87%

Stimulus and economic measures

• Despite interest rates being at record lows, private-sector credit slowed to 5.1% year on year in July, down from 5.6% in June, driven by reduced corporate sector demand. Corporate credit, which accounts for just more than 56% of total credit, slowed to 6.6% year on year in July down from 7.6% in June. Household credit crept up to just 3.2% year on year from 3.1% in June
• South Africa’s headline consumer inflation quickened to 3.2% year-on-year in July from 2.2% in June, according to data from Statistics South Africa. Nedbank forecasts inflation to average 3.3% this year and PwC 3.6%. PwC also sees the economy shrinking by 10.4% in 2020
• Auditor-general (AG), Kimi Makwetu, has published a report on the multi-billion rand Covid-19 relief package and how it was spent by various government departments.  The report shows that IT systems used in government were not agile enough to respond to the changes required. In addition, “pre-existing deficiencies” in the supply chain processes of government, such as overpricing, unfair processes, potential fraud and corruption, were ‘amplified’
• Eskom has warned that further deterioration of the system may mean load shedding is escalated at short notice for this week. This had led to analysts and ratings agencies signalling concern about how this impacts economic recovery

UAE

Exit strategy for business

• The UAE has reported a total of 71,540 confirmed cases, 390 deaths and has carried out nearly 7.2 million Covid-19 tests to date
• National Emergency Crisis and Disaster Management Authority (NCEMA) has directed a group of schools to switch to online education after suspected cases of Covid-19 was diagnosed among the school staff
• 31,000 volunteers registered for the UAE’s Covid-19 vaccine clinical trials, making it among the largest in the world in terms of volunteer recruitment
• Schools have reopened with Covid-19 protocols in place. The Knowledge and Human Development Authority (KHDA) have made it mandatory for all Dubai school staff to undergo Covid-19 screening
• The Federal Authority for Government and Human Resources has announced a work from home policy for mothers as schools reopen
• To boost innovation in the UAE, the Ministry of Finance announced the launch of the next phase of the Mohammed Bin Rashid Innovation Fund, which will integrate all the services the fund provides under one national umbrella

Stimulus and economic measures

• UAE has sent 5 metric tonnes of medical supplies and testing kits to Myanmar in the fight against Covid-19
• Study shows UAE residents more willing to retrain to increase future earnings after Covid-19.
• Emirates Airline has turned to the Dubai Government for $2 billion support fund to help amid the Coronavirus crisis