Covid-19 and Government Recovery Plans

As unprecedented large financial packages emerge from Governments across the globe in a bid to quickly revive economies and restore business and consumer confidence, countries continue their struggle to suppress the virus. The result is a persistent struggle between public health policy and the reopening of business, leading to a host of complex and ever-changing public policy developments across different jurisdictions.

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.

UK

Exit Strategy for Business

• The Prime Minister Boris Johnson is thought to be considering asking workers in England to go back to the office from August, where possible. Whitehall, where Government Departments are located, is also preparing for civil servants to return to their offices
• It is a move that will be welcomed by hospitality businesses in city centres and MPs who have expressed fears about reviving the economy and the long-term impacts of people working from home
• Reduced VAT for the hospitality and tourism sectors came into effect this week with major high street chains KFC, Nando’s, McDonald’s and Pret a Manger announcing they will lower prices for consumers
• With the Government’s furlough scheme winding down, online fashion retailer ASOS has announced it will repay money it received under the Government’s Job Retention Scheme
• With non-essential retailers given the green light to re-open earlier this summer, well-known high street stores John Lewis and Primark have announced they will not take advantage of the Government’s furlough bonus scheme for returning workers

Stimulus and Economic Measures

• With the Government’s economic recovery focused on consumer spend, it has announced that face coverings will be mandatory in stores and shops to enhance protections workers and give people confidence they can shop and spend safely

EU

Exit Strategy for Business

• In preparation of a possible second wave of COVID-19 infections in the autumn, the European Commission presented its short-term guidelines aimed at strengthening the preparedness of EU Member States
• The guidelines, presented in the form of a Communication, laid out the Commission’s recommendations in a number of areas including testing and contact tracing; improved public health surveillance; and widened access to medical countermeasures such as personal protective equipment, medicines and medical devices

Stimulus and Economic Measures

• The European Commission has recommended that Member States exclude companies with links to countries on the EU’s list of non-cooperative tax jurisdictions from national schemes for financial support for businesses
• The EU executive suggested that similar restrictions should apply to companies that have been convicted of serious financial crimes, including financial fraud, corruption, non-payment of tax and social security obligations
• Following two roundtable discussions facilitated by the European Commission, the financial sector together with consumer and business organisations agreed on a set of “best practices” aimed at mitigating the economic impact of the pandemic
• The initiative is part of a wider effort by the Commission to increase lending to the real economy

Germany

Exit Strategy for Business

• Number of infections remain at a low level: According to the Robert Koch Institute, 200,260 people in Germany have been proven to be infected with the coronavirus (as of 16 July). That are 534 more than the day before. The number of deaths rose by seven to 9.078.
• Luxembourg now considered a risk area: The German Ministry of Foreign Affairs has issued a travel warning for Luxembourg. However, there are no border controls currently.

Stimulus and Economic Measures

• Deutsche Bank takes many credit deferrals: At Deutsche Bank, the number of clients who are not paying their loans because of the Covid-19 crisis is growing. There are currently around 70,000 deferral requests from private customers of Deutsche Bank and Postbank.
• Job cuts at Daimler: Car manufacturer Daimler looks likely to cut significantly more jobs than previously stated. The 10,000 or 15,000 jobs that have been circulated so far, and which are reported to be cut, will probably not be enough.
• The federal state of Lower Saxony approves second Corona crisis package: The state parliament is adding an 8.4-billion-euro package to deal with the Corona crisis. About half of the money will be needed to compensate for tax shortfalls. In addition, the economy, health, local authorities and social areas such as sport and culture are to benefit.

Ireland

Exit Strategy for business

• The Irish Government has decided to delay moving into the next phase of exiting COVID-19 restrictions (Phase 4). Originally due to take place on Monday 20 July, the Government has postponed the date until the 10 August to “avoid risking any reversal” of the decline in the spread of the disease
• The current restrictions of 50 people at organised indoor gatherings and 200 people at organised outdoor gatherings remains, as does a prohibition on pubs, bars and nightclubs reopening
• The Government continue to advise against all non-essential foreign travel. It is expected to publish a ‘Green List’ of locations where foreign travellers are exempt from a mandatory 14-day quarantine on arrival. This is currently expected to be published on 20 July
• The Minister for Further and Higher Education Simon Harris has said the decision to not proceed with moving to Phase 4 increases the ability to ensure that children return to education in September
• 3 million people have downloaded the COVID Tracker app within 8 days of launch, reaching 35% of the adult population aged 16 and older in Ireland

Stimulus and Economic Measures

• The Government is considering extending the Temporary Wage Subsidy Scheme (TWSS) and opening it up to people who have not been covered by it, such as seasonal workers. An estimated 405,000 employees are currently being supported by the scheme, at a total cost of €2 billion so far
• The Government is due to publish its July Stimulus Package next week, in a bid to incentivise economic recovery

KSA

Exit Strategy for business

• Saudi Arabia continues to report high numbers of COVID-19 cases, bringing the total to 235,111 confirmed cases and 2,243 deaths
• The Kingdom announced a heavy fine for anyone who violates instructions regarding entry to holy sites during Hajj 2020
• Jawazat, Saudi Arabia’s Directorate General for Passports, has announced that residence permits of migrant workers benefiting from a recent royal decree will automatically be extended for another three months, free of charge

Stimulus and Economic Measures

• The Kingdom will postpone some private sector loan payments for a year to reduce the impact on businesses of the COVID-19 pandemic. The initiative includes postponing the repayment of loan installments due this year, totaling an estimated SAR 670 million, for all entities that had signed up for the Corporate Sustainability Support Programme
• The Saudi stock exchange, Tadawul, announced the launch of derivatives trading this week, as part of its effort to enhance the local capital market despite investor anxiety over slowing growth and slumping oil prices

South Africa

Exit Strategy for business

• Level 3 restrictions remain in place and the national state of disaster extended to 15 August 2020
• Regulations on the wearing of masks have been strengthened. It is now mandatory to wear a mask in public.
  • Employers are now legally obligated to ensure that anyone entering and working on their premises must be wearing a mask
• Additional measures in place effective 13 July to conserve hospital capacity are:
  • The sale, dispensing and distribution of alcohol is suspended with immediate effect;
  • A curfew is in place between the hours of 9pm and 4am (apart for people travelling to work, essential workers and seeking medical assistance)
  • Family visits and other social activities are forbidden
• Restrictions have been eased on activities posing a lower threat, subject to protocols:
  • Auctions are permitted;
  • Parks can open
• The property sector continues to be impacted by the weak trading environment and some listed property companies have announced that their portfolios may decline in value between 10% and 20%.
• Financially troubled airline, SAA, evaded possible liquidation after its contentious business rescue plan finally secured backing from creditors and stakeholders. A new interim CEO has been appointed, but unions are protesting this. The Department of Public Enterprises has committed R26billion to help fund SAA’s restructuring plan.

Stimulus and Economic Measures

• To improve the liquidity in the market, the Reserve Bank bought R5.1bn government bonds in June and this increased the total government securities held by the bank to R35.9bn, since the start of the programmein March. The SARB mentioned that it will continue to make the purchases until the market conditions have normalised and the purchases are not aimed at financing the state’s rising deficit.

UAE

Exit strategy for business

• The UAE government has announced that phased renewals of visas and Emirates IDs that have expired since March and onwards must begin immediately – fees and fines will be activated accordingly
• The UAE’s healthcare sector has moved on to the third stage of COVID-19 vaccine research and clinical trials – if proven effective, the country will move on to mass production
• Abu Dhabi’s Department of Culture and Tourism has revealed signs of progress within the tourism sector as the emirate prepares to gradually open up to international travel – virtual guided tours for the education sector at prominent tourist sites and museums are being conducted
• Abu Dhabi has announced that all its private healthcare facilities are now COVID-19 free and are set to continue to provide a full range of healthcare services to patients; the emirate has also opened up a rapid-testing facility for COVID-19, which delivers results within five minutes, to screen people entering without a negative result

Stimulus and Economic Measures

• HRH Sheikh Hamdan Al Maktoum, Crown Prince and Chairman of Dubai’s Executive Council announced a new economic stimulus package worth AED 1.5 billion for business. The initiative aims to improve the liquidity of companies, support business continuity, and reduce costs