Covid-19 and Government Recovery Plans

As many European countries are seeing a marked resurgence in coronavirus cases, governments are moving quickly to implement effective and targeted measures that allow commercial and social activity to continue in some capacity.

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

• The Prime Minister Boris Johnson has labelled a possible second lockdown disastrous for the UK economy. As the rate of infections rise, the Government is instead trying to balance local restrictions with also encouraging people to go back into their offices, for at least part of the week
• John Lewis has announced that, for the first time since 1953, its staff will not receive a bonus this year
• Fashion retailer Next has said overall the impact of the pandemic on business had been “expensive and miserable”
• Grocery chain, Co-op saw its sales rise in the first half of the year with like-for-like sales in food up by 8.8% in the six months to 24 July. It said that it had paid out a total of £13 million in “Covid-19 ‘thank you'” bonuses to staff. Co-op will create 1,000 jobs and open 50 new stores this year
• Sales at the supermarket Morrisons surged in the first half of its financial year but the supermarket saw profits drop because of coronavirus-related costs. Profit fell by more than a quarter after costs rose by £155 million to deal with the pandemic. This included hiring temporary workers as well as accommodating the shift from buying in-store to shopping online where, according to Morrisons, profit margins are lower

Stimulus and Other Economic Measures

• The Bank of England has kept interest rates at 0.1%, citing a lack of clarity over the UK’s future trade relationship with the EU and the path of the coronavirus pandemic as cause for concern
• Chancellor Rishi Sunak has said he will be creative in helping people find work, saying it’s his top priority. Labour Leader Keir Starmer used his speech at the Trades Union Congress’ annual conference to call on the Government to replace the furlough scheme with targeted support
• The Government’s Eat Out to Help Out scheme has driven UK inflation to a five-year low, falling to 0.2% in August, down from 1% in July. The eating out scheme, which ran from Monday to Wednesday in August, offered 50% off food up to the value of £10
• The Government has announced a £546m funding package designed to help protect care homes from Covid-19 this winter
• Landlords have reacted with dismay to a further rent holiday for struggling businesses, saying it will hit pension schemes, savings, and lenders. In April the government announced a moratorium on evictions for non-payment of rent, which was then extended until the end of 2020

EU

Exit strategy for business 

• In order to tackle the issue of insufficient coordination between various contact tracing and warning apps, the EU Commission announced it is seeking to create an interoperability gateway service linking national apps across the EU
• The aim of the initiative is to ensure the safe exchange of information between various applications
• The gateway will cover almost all apps currently in operation in the EU

Stimulus and economic measures

• The EU Commission launched its 2021 Annual Sustainable Growth Strategy (ASGS) which provides guidance on the utilisation of the bloc’s €672.5 billion recovery package
• According to the strategy, Member States will have to submit their draft recovery and resilience plans outlining national investment and reform agendas in order to receive access to the recovery funding. The ASGS contains also guidance on the specific format and presentation of such plans
• The plans will have to directly address a set of pre-determined priorities. These include boosting the uptake of renewables and clean mobility, improving the energy efficiency of buildings, encouraging the digitalisation of public administration, increasing the rollout of rapid broadband services, adapting education systems to the needs of a digital world and increasing European industrial data cloud capacities

Germany

Exit Strategy for Business

• Vaccine funding started: The German government is funding three vaccine developers with a total of €750 million. The vaccine developers BioNTech from Mainz are being funded with €375 million and CureVac from Tübingen will receive €230 million. Funding discussions with the third vaccine developer, IDT Biologika from Dessau, have not yet concluded
• Local Elections in the state of North Rhine-Westphalia: With around 14 million eligible voters, the local elections in North Rhine-Westphalia on Sunday are the largest polls of the year, the first local elections under comprehensive coronavirus conditions
• Fans return to sports facilities: The federal states have agreed to allow sporting events with limited spectator numbers again. Federal Minister of the Interior Horst Seehofer supports the agreed test phase

Stimulus and Economic Measures

• Short-time work is extended: The Federal Cabinet have agreed to extend regulations for short-time work compensation. By doing so the federal government is aiming to create reliable framework of conditions for employees and employers and a stable labour market in 2021
• Almost all industries are on course for recovery: After the slump, the German economy was able to grow again in the third quarter, with growth in almost all sectors
• Federal government strengthens public health service: A total of €4 billion is to be spent on strengthening the public health service by 2026. Among other things, these funds will be used to create 5,000 new full-time jobs. In addition, digitization in the healthcare sector is to be driven forward by investment in modern, networked IT systems
• The child bonus is paid out: Around 18 million children in Germany will receive the child bonus. It amounts to €300 and is paid for each child for whom there is a claim to child benefit for at least one calendar month in 2020. The bonus will be transferred in two instalments – €200 in September and €100 in October

Ireland

Exit Strategy for business

• On 15 September the Government published Resilience & Recovery 2020-2021: Plan for Living with Covid-19 – a Framework that is aimed to dictate restrictions for the next six to nine months. The Framework consists of 5 levels (5 being the most severe), with Ireland currently on Level 2
• Level 2 restrictions state that cafes, restaurants and pubs can only accommodate a maximum of 6 people from no more than 3 households at a table, while shops and services can remain open
• However, the County of Dublin has had additional restrictions imposed due to rising cases of coronavirus. These include no more than two households should meet at a time and you should limit travel outside the region
• Speculation is mounting in the media that the County of Dublin will move to Level 3 with further restrictions in place soon and if coronavirus cases do not stop rising

Stimulus and Economic Measures

• A new COVID Products grant scheme has been set up to support businesses producing vital medicines and medical equipment in Ireland. The scheme allows for grants of up to 50% of eligible capital investment. The scheme will be delivered through IDA Ireland and Enterprise Ireland.
• A Restart Fund of €250 million was created for micro and small enterprises. Additional funding of €300 million will be provided through an enhanced Restart Grant(also known as the Restart Grant Plus). Some businesses, such as B&Bs, not previously included in the scheme, will now be eligible.
• Further funding of €500,000 million will be made available through the Future Growth Loan Scheme. Longer term loans from €100,000 to €3 million are available for SME’s under the Future Growth Loan Scheme. The loans have a maximum interest rate of 4.5% and the first €500,000 borrowed can be unsecured.

KSA

Exit Strategy for Business

• The total number of Covid-19 confirmed cases in the Kingdom has reached 327,551 with 4,369 fatalities
• Saudi Arabia will completely lift restrictions on citizens leaving and returning to the Kingdom, and allowing the opening of land, sea and airports after 1 January 2021
• Expats residing in Saudi Arabia, who had gone to their native country on re-entry visas and could not return within the stipulated time in the wake of the pandemic, can now return to the country
• The Ministry of Interior is preparing to announce a strategy to gradually lift the suspension of Umrah services based on the latest Covid-19 developments
• The land borders between Kuwait and Saudi Arabia have reopened following a six-month closure
• Saudi schools continue with distance-learning to contain the spread of the virus
• Saudi Arabia’s Jeddah municipality has shut down 235 shops, including 51 workshops, for breaching health protocols over the last week

Stimulus and Economic Measures

• Saudi Arabia has pledged its commitment to tackling the impact of Covid-19 pandemic on developing countries and some of society’s most vulnerable groups, as part of its efforts to revive the local and global economies
• Saudi Arabia is pushing ahead with its largescale tourism projects to boost the industry following the devastating effects of Covid-19. The projects are worth more than USD 810 billion and are expected to transform the Kingdom into one of the largest leisure tourism industries in the world by 2030

South Africa

Exit Strategy for Business

• On Wednesday 16 September, the President announced a move to Lockdown Level 1, although the national state of disaster has been extended to 15 October 2020.  The changes under Level 1 include:

• • Gatherings will be allowed as long as the number of people do not exceed 50% of the normal capacity of a venue –  up to a maximum of 250 people for indoor gatherings and 500 people for outdoor gatherings;

• • Maximum capacity at funerals has been increased to 100 people

• • The government will gradually ease restrictions on international travel for business and leisure from 1 October – subject to containment measures. A list of permitted countries will be published and based on the latest scientific data;

• • International travel will only be allowed through the main border ports or through OR Tambo International, Cape Town International, or King Shaka International and travellers will need to provide a negative coronavirus certificate or be quarantined for 14 days at their own cost.

• • The evening curfew will apply between 00h00 and 04h00;
  • Alcohol for home consumption can be sold between 09h00 – 17h00 from Monday to Friday

• The government plans to expand its testing programme to include more categories of people and it also plans to step up its contact tracing capabilities
• South Africa is also participating in a World Health Organisation initiative to ensure access and distribution of a successful coronavirus vaccine at a lower cost. Local experts are also working on a vaccine

Stimulus and Economic Measures

• The government has committed to R260bn in spending cuts to get a handle on its yawning 15.8% consolidated budget deficit and deteriorating debt levels. The treasury expects it will reach 81.8% by the end of this fiscal year
• The President announced, on Wednesday 16 September, that there are new plans in place for economic stimulus in partnership with civil society and the private sector
• Finance Minister, Tito Mboweni, has warned that South Africa’s shock second-quarter collapse in GDP and uncertainty about the economic rebound as lockdown restrictions are eased, suggests the economic outlook for the year may be even bleaker than the latest forecasts from the Treasury and the Reserve Bank
• Stats SA revealed that the economy shrank by an annualised 51% during the second quarter, the worst quarterly collapse on record. The biggest drags on growth came from the construction, manufacturing and mining sectors — which fell by 76.6%, 74.9% and 73.1%, respectively. Household consumption contracted 49.8%

UAE

Exit Strategy for Business

The UAE announced the approval of vaccines for front-line workers on Monday 14 September. Abdul Rahman Al Owais, Minister of Health and Prevention, said the phase III clinical trials show that the vaccine is effective and has a strong response, generating antibodies to the virus

• Federal government employees who break the Covid-19 rules at their workplace will face a three-day salary cut. The Federal Authority for Human Resources (FAHR) on Tuesday 15 September urged all federal government workers to strictly adhere to safety measures and instructions
• Experts predict a GCC “SME boom” as a new wave of regional entrepreneurs emerge from the Covid-19 pandemic. Recently, commercial registrations have seen triple-digit increases with tender boards across the region awarding tens of millions of dollars in contracts to these enterprises.

Stimulus and Economic Measures

• Abdullah bin Touq Al Marri, UAE Minister of Economy, affirmed that the signing of the peace accord between the UAE and Israel would open up new horizons for economic cooperation in a way that serves their mutual interests and enhances the foundations for sustainable development at regional level
• The Board of Directors of the Central Bank of the UAE reviewed new initiatives and development plans envisaging the Central Bank’s efforts to become one of the best in the world, in line with the directives of H.H. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Presidential Affairs
• A new initiative to support Covid-19 frontliners will provide scholarships for children of frontline healthcare professionals to attend public schools across the UAE. The Hayyakum initiative has been set up as a partnership  between the Ministry of Education and the Frontline Heroes Office