Business continuity & Covid-19: the reaction from EMEA Governments

Our Public Policy Teams across the EU are helping clients navigate Governmental measures being put in place to protect business continuity in light of the Covid-19 pandemic. Here’s a snapshot of such measures. Should you wish to explore further or need advice on how to navigate these systems, please do get in touch.

Week 6 of Covid-19 disruption has seen Governments across EMEA deal with the immediate implications of the pandemic but also look to the future in terms of easing of restrictions and the looming global recession.

Exit strategy

• As the Chief Medical Officer for England warns we might be required to maintain social distancing until the end of the year, the UK Government is under increasing pressure – from his own backbenchers and the public – to outline its plans and requirements to ease lockdown restrictions. Prime Minister Boris Johnson is reported to be cautious about easing current restrictions for fear of sparking a second wave of Covid-19 infections leading to another lockdown which would cause greater economic damage.
• The influential 1922 Committee of Tory backbenchers had a tense meeting on Wednesday with MPs voicing concerns the lockdown could devastate the economy and fears that if lockdown measures aren’t eased within the next few weeks that businesses will go under and leave the UK without a functioning economy.
• That pressure ramped up on Thursday when Scotland’s First Minister Nicola Sturgeon outlined a strategy and framework for easing lockdown measures in Scotland, making clear it’s important to have an adult conversation with people about this. Talking about striking a better balance, Sturgeon was clear there’s no ‘flick of the switch’ moment and said any steps will need to be small, gradual and incremental.
• In a sign the private sector is adapting to the ‘new normal’, DIY chain, B&Q, is re-opening its stores with measures in place to ensure social distancing and two of the UK’s best-known housebuilders are set to resume work on construction sites in May with additional protocols in place to protect their workers. It comes as CBRE warns that curbs on construction could see just see 10,000 new houses built in London this year and that keeping building sites shut until July risks a fall of private house building by more than 50%.

Business resilience

• The Chancellor, Rishi Sunak has revealed a £1.25bn scheme to protect innovative companies during the Covid-19 pandemic including a new £500m loan scheme for high growth firms in partnership with the British Business Bank and £750m in targeted support for SMEs focusing on R&D.
• The Coronavirus Job Retention Scheme has been extended until the end of June. The system, which went live at the start of this week, sees the Government cover 80% of furloughed workers’ wages up to £2,500 a month.
• One of the Bank of England’s top policymakers has warned that the UK faces its worst economic shock in several hundred years though he said there was “in principle” a good chance that the UK would return to its “pre-virus trajectory once the pandemic is over” . It comes as the Director of the Institute for Fiscal Studies has said the UK’s budget deficit is set to see an absolutely colossal increase to a level not seen in peacetime with the economic impact of Coronavirus likely to push it as high as £260bn.
• There has been a further warning about the survival of UK airports, with industry experts saying that several airports could close given the severe drop in the number of flights. Nine out of 10 flights have been grounded since the UK went into lockdown.

Ireland

Minister for Finance publishes Stability Programme Update 2020

• Minister Donohoe published the government’s update, which sets out a macroeconomic and fiscal scenario for the period 2020-2021, incorporating the impact of the COVID-19 pandemic (Press Release).
• GDP will fall by 10.5% this year and the gradual recovery assumed in the second half of the year is projected to gain momentum next year, with the economy growing by 6 per cent and unemployment falling to below 10 per cent next year.
• To chart Ireland’s way out of this unprecedented situation, an economic recovery plan will be published soon (before 5 May) that will lay out the necessary measures to restore full employment and outline the steps needed to get our country back on track in the period ahead.

Government works on Covid-19 Exit Strategy

• In a Press Briefing, An Taoiseach Leo Varadkar has stated that the Irish Government is developing a plan for Ireland’s exit strategy in conjunction with the National Public Health Emergency Team.
• The aim is to start easing restriction on May 5, but Varadkar has stressed that Ireland must meet three key criteria before they can start implementing the exit strategy. These include: a continued improvement in the rate of increase of the virus; the capacity of hospitals to deal with those who require treatment if a surge occurs; and adequate testing and tracing systems.
• We await the publication of further and more detailed information from the Government.

InterTrade Ireland and Tech Ireland develop online platform helping firms collaborate on coronavirus launches

• Spearheaded by InterTrade Ireland and TechIreland, the cross-border platform allows businesses to see quickly, in and beyond their region, who they can work with to combat the many supply chain and manufacturing challenges generated by the pandemic and meet pressing public need.
• Presented as an interactive map, it will initially focus on healthcare innovation supports but will soon expand to include broader economic and societal responses to coronavirus.
• More than 100 businesses and supports are featured on the map. It highlights more than 10 key categories including PPE, contact tracing, ventilators, among others.
• To be featured on the Covid-19 Innovation Reponses Map, or if you are aware of projects that should be included, please email John@TechIreland.org.

Further statement from our Minister for Transport in relation to the Vehicle Testing, Driver Licensing, and Related Services

• The Minister for Transport, Tourism and Sport, Shane Ross, has announced the details of the legislative steps he has taken in support of the necessary closure of a range of Road Safety Authority services due to Covid-19, which may affect companies requiring the transportation of goods.
• Under the new measures, NCT vehicles with a test that was or will be due on or after 28 March 2020 have that test date extended by 4 months. For Commercial Vehicle Roadworthiness Tests (CVRT) – vehicles with a test that was or will be due on or after 28 March have that test date extended by 3 months.
• Similar extensions have been put in place for driver licences. Full details here.

UAE

Easing Covid-19 Restrictions

• Every person entering a mall will be required to wear a mask and pass a coronavirus health check under new guidance issued from the Dubai government for when premises are allowed to reopen. New protocols issued Wednesday 22^nd April will require malls to operate at 30 per cent capacity in stage one after reopening, with elderly people above 60 and children aged 3-12 not allowed in.
• Dubai Airports, operator of the world’s busiest airport by international traffic, is planning for “gradual remobilization” once travel restrictions aimed at containing the spread of Covid-19 are eventually lifted. It is also offering relief measures for its aviation and commercial partners under a “business stabilization framework”, Dubai Airports said in a statement on Wednesday 22^nd April.

Ramadan

• The Federal Authority for Government Human Resources, FAHR, announced a five-hour workday for civil servants during the Holy Month of Ramadan, which is expected to start on April 24th.
• The Dubai government has issued a new set of guidelines around Ramadan against the backdrop of the Covid-19 pandemic including banning the assembly of more than 10 people for Iftar and Suhoor gatherings, media reports have indicated.
• Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai announced the launch of a ’10 million meals campaign’ that will be implemented during the month of Ramadan and encouraged people to donate towards the programme.
• The Islamic Affairs and Charitable Activities Department (IACAD) in Dubai has announced the cancellation of all permits for Ramadan tents, in light of the COVID-19 pandemic. In line with the UAE’s efforts to contain the outbreak and to protect public health and safety, the IACAD will cancel all permits for Ramadan tents throughout 2020.

 Other

• In a demonstration of the UAE’s support for joint cooperation and coordination between countries to tackle the spread of the COVID-19 pandemic, the Ministry of Foreign Affairs and International Cooperation, MoFAIC, has taken all necessary measures to facilitate the repatriation of citizens from friendly countries who were unable to return to their homeland after the suspension of all flights to and from the UAE, in coordination with embassies and consulates connected to the UAE.
• The Executive Committee of the Bureau International des Expositions, BIE, has collectively agreed to recommend the postponement of Expo 2020 Dubai to 1st October 2021 – 31st March 2022. As changing the dates of an Expo requires the support of a two-thirds majority of Member States of the BIE (Article 28 of the Paris Convention of 1928), Member States will now be called upon to vote on the Executive Committee’s recommendation. Voting will be carried out remotely between Friday 24th April and Friday 29th May.

EU

ECB relaxes collateral rules further

• The European Central Bank (ECB) further relaxed its collateral rules for bonds, announcing that any bonds recently downgraded below the triple-B investment grade minimum will remain eligible for use as collateral for refinancing loans. The move is the latest step in the ECB’s attempts to avert a eurozone debt crisis.
• The new rules will apply to all bonds which were rated at investment grade at least until 7 April. The only condition is that bonds’ rating does not deteriorate further than two notches below the triple-B minimum.
• The new collateral rules are temporary and will remain in place until September 2021.

Commission proposes new measures to support the agri-food sector

• The European Commission proposed new exceptional measures aimed at supporting the most affected agricultural and food markets.
• The package foresees the provision of private storage aid for the dairy and meat sectors, flexibility in the implementation of market support programmes for various product groups as well as provisions allowing exceptional derogation from EU competition rules for certain sectors. The derogation will allow operators in selected sectors to collectively undertake steps in order to stabilise the market.
• The Commission hopes to receive red light for the new measures from Member States by the end of April.

EBA issues further guidance on supervisory flexibility during the crisis

• The European Banking Authority (EBA) issued a new guidance document clarifying how additional flexibility will be applied in banking supervision when it comes to market risk, securitization and recovery planning amongst others.
• The document clarifies that reporting obligations under the FRTB Standardized Approach for market risk will be postponed until September 2021.
• The guidance also elaborates on the options for prudential flexibility available to national authorities and clarifies further the prudential application of the definition of default and forbearance during the crisis as well as the application of moratoria on loan repayments to securitisations.

Germany

Coalition parties agree on additional support package over Euro 10 billion: In night-long negotiations to 23 April, the ruling coalition parties of the conservative CDU/CSU and social democrat SPD agreed to a new aid package for Germany worth more than 10 billion Euro.

• Increase in short-time working allowance: The coalition leaders want to increase the short-time working allowance in stages. For those who receive it for working hours reduced by at least 50 percent, it is to rise to 70 percent and 77 percent for households with children from the 4th month of receipt and to 80 percent and 87 percent for households with children from the 7th month of receipt. Additional income opportunities for employees on short-time work will be expanded.
• Extension of unemployment benefit: The period for unemployment benefit I is to be extended. For unemployed people aged 50 and over, the period for which unemployment benefit is paid will be increased in several steps up to 24 months.
• Fiscal aid for the gastronomy trade: Catering businesses are to receive tax relief by reducing the value-added tax on meals to the reduced tax rate of seven percent for a limited period from July 1 until June 30, 2021. In total, the tax reduction would mean a relief of four billion euros.
• More money for schools: In early May, school classes are to be gradually restarted. The federal government is prepared to support schools and pupils in digital home-schooling with 500 million euros. An immediate funding program is to enable schools to grant needy pupils a subsidy of 150 euros for the purchase of appropriate equipment.
• Improvements to economic aid: The coalition government plans tax relief for small and medium-sized businesses to ensure their liquidity. Foreseeable losses for this year are to be allowed to be offset against advance tax payments from last year.

The Federal Government had already put together massive aid packages for companies, the self-employed and employees. It plans to do so with new debts of 156 billion euros.

South Africa

Social and Economic Relief Packages

On Tuesday evening, 21 April 2020, President Ramaphosa announced that the government was working on further social economic relief packages for the country that would include both the formal and informal sectors.

Social relief measures include:

• R20bn “for additional expenditure on personal protective equipment for health workers, community screening, testing capacity, beds in field hospitals, ventilators, medicine and staffing.”
• R20bn for municipalities to provide emergency water supply, “sanitisation of public transport and facilities, and providing food and shelter for the homeless.”
• R50bn to relieve “the plight of those who are most affected by the coronavirus.”

Economic relief efforts include:

• R100bn to protect existing jobs and to create jobs.
• R2bn to assist small business and spaza (informal convenience) shop owners.
• Additional tax measures for big business aimed at freeing up to R70bn.  These include the introduction of a four-month holiday for companies’ skills development levy contributions, fast-tracking value-added tax refunds and a three-month delay for filing and first payment of the carbon tax

Opening up the economy

On Thursday, 23 April 2020, the President announced steps for the re-opening of the country’s economy as from 1 May 2020.  This “Risk adjusted strategy for economic activity” outlines the phasing of these steps into five separate stages based on new case rate and healthcare preparedness to deal with them.  The strategy will be applied at national, provincial, district and municipal level.

The levels, which represent the level of action needed to stop the spread of the virus, are as follows:

• Level 5 – drastic measures are required
• Level 4 – some activity can be allowed, subject to extreme requirements
• Level 3 – the easing on some restrictions on work and social activities
• Level 2 – further easing of restrictions, but the maintenance of social distancing
• Level 1 – most normal activity can resume, with caution and health guidelines followed at all times

 SA is currently in “level 5″ with the strictest level of restrictions but the level is expected to be reduced to “level 4″ from Friday, 1 May 2020 (although, the government will review this on Thursday, 30 April 2020). Economic activity will be allowed subject to extreme precautions, and some business will be allowed to resume operations subject to strict conditions. Companies will have to develop strict plans for the return of their workforce – including a limitation on the amount of the workforce allowed to return, with no more than 1/3 of the workforce to be present. In addition, all staff that can work remotely must be allowed to do so.

Back to school

The Department of Basic Education has proposed that schools reopen on a phased basis.  It mandates that social distancing principles will need to be implemented including the fact that pupils may not share desks and must sit at least 1,5m apart. This measure has caused concern amongst teacher’s unions and governing body associations as they physical distance requirement is not possible in many schools, especially those in townships which are often over-crowded.  The proposed phased return dates are as follows: May 6 for Grades 12 and 7; May 20 for Grades 11 and 6; June 3 for Grades 10 and 5; June 17 for Grades 9 and 4; July 1 for Grades 8 and 3; July 8 for Grades 2 and 1; and Grade R on July 15.