Covid-19 and Government Recovery Plans

More progress this week across EMEA on Government plans for recovery, but lots of questions remain.  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. Contact: lucy.cronin@instinctif.com

UK

Exit Strategy for Business

• Key to further relaxing the lockdown is a “track and trace” system which Prime Minister Boris Johnson says will be in place by 1 June. Johnson has claimed that the Government was preparing 25,000 trackers to trace 10,000 contacts a day.
• Enforced quarantine measures at the UK border are expected to be unveiled in greater detail in coming days. It comes as Wizz Air and other airlines ready to ramp up flights between the UK and Europe over the summer and airports across the UK make preparations for increased passenger numbers through their arrivals and departures lounges.
• The Government will encourage people to take a ‘Great British break’ for their holidays this summer with the Culture Secretary suggesting Britons may be able to holiday at home from July.
• UK Hospitality, the trade body for the hospitality sector, has released secure guidelines to help pubs and restaurants reopen. It has called on the Government to support the measures, which it says will help the industry restart as early as July.

Stimulus and Economic Measures

• The Government has launched the Future Fund which will help innovative and high-growth British businesses secure investment, through the COVID-19 pandemic. UK-based companies can now apply for a convertible loan of between £125,000 and £5 million, to support continued growth and innovation in sectors such as technology, life sciences and the creative industries.
• Cross-channel ferry operators and other freight firms, including Eurotunnel, are to get £35m in financial support to ensure the continued supply of “vital” food and medical supplies to the UK.
• The Government is increasing the size of loans available to keep large companies afloat from £50m to £200m. Any firm borrowing more than £50m will be banned from paying bonuses and dividends as well as undertaking share buybacks.
• The Government has announced that employers will be able to make claims through the Statutory Sick Pay (SSP) Rebate Scheme from 26 May. The scheme will allow SME’s to recover SSP payments they have made to their employees, for companies with fewer than 250 employees.

Ireland

Exit Strategy for business

• On 18 May, Ireland entered Phase 1 of a five-phase exit from the current restrictions in place due to COVID-19. Outdoor retail stores, as well as hardware stores; builders merchants, garden centres and farmers markets; opticians; vehicle, motorcycle and bicycle repair stores; and office and IT service stores are allowed to reopen once social distancing measures are in place
• Following the introduction of Phase 1, the Government warned that those businesses who “see a ‘loophole’ in the Health regulations” are not respecting the spirit of the approach, and urged them to wait until it was appropriate to reopen
• The formation of a special Tourism Taskforce dedicated to the economic recovery of the tourism and hospitality sector was announced this week

Stimulus and Economic Measures

• The Department for Business, Enterprise and innovation announced the launch a Restart Grant for Small Businesses. From a total fund of €250 million, grants of between €2,000 and €10,000 can be issued to small businesses with a turnover of under €5 million and employing 50 people or less
• The scheme applies to businesses that were closed or impacted by at least a 25% reduction in projected turnover out to 30 June 2020, is intended as a contribution towards the cost of reopening or keeping a business operational. Applications for the scheme will be available from local authority websites from 22 May.
• The Government confirmed that over 473,500 employees have now received at least one payment under the Temporary Wage Subsidy Scheme. The cumulative value of payments made to employers under the scheme is €1,048 million.
• Food and Drink Ireland, the leading food association in Ireland, has called on the government to introduce an export credit insurance scheme, which protects an exporter against the risk of non-payment by a foreign buyer.

UAE

Exit strategy for business

• The UAE’s Interior Ministry announced that the national sterilization programme will kick off in industrial areas and worker accommodation areas from 6pm to 6am, starting 20 May.
• UAE residents who have been stuck abroad amid the coronavirus outbreak will be able to return from 1 June, provided they meet specific criteria. Those wishing to return to the UAE must have a valid visa
• Smart Dubai has announced details regarding the recent decision issued by the Strategic Affairs Council to mandate UAE PASS as the only digital identity to be used by citizens and residents to access government services in Dubai
• The UAE’s Ministry of Economy has set up an interactive online tool to help companies address the impact of the COVID-19 pandemic as part of efforts to shore up the private sector during the crisis

Stimulus and Economic Measures

• The Mohammed bin Rashid al Maktoum Humanitarian and Charity Establishment, MBRCH, has spent AED 58 million in supporting seven programmes to strengthen national efforts to combat the pandemic
• Highlighting the comprehensive economic support packages rolled out by the UAE, Abdulla Al Saleh, Undersecretary of the Ministry of Economy for Foreign Trade & Industry, said “as part of the long-term stimulus plan, the UAE government’s economic stimulus package targeting the financial and private sector has totaled AED 282 billion to date, focusing on sectors most directly affected by the pandemic.”
• Dubai Land Department’s (DLD) statistics revealed that there was a 12 per cent and 33 per cent rise in overall transactions in January and February respectively, compared to the same months in 2019

KSA

Exit Strategy for business

• The Saudi Government offered more detail on the 24-hour lockdown to be enforced during the Eid Al Fitr holiday. The authorities will exempt employees working at pharmacies, supermarkets, facilities maintenance, restaurants, hospitals/clinics and public security entities from the lockdown hours, as long as they obtain the required permits
• The Saudi Government ceased to enforce the closing of retail outlets when any of the five daily Muslim prayers time arrives. In the past, retailers such as restaurants and shopping malls were expected to close their doors when the call to prayer sounded. In light of retail sector’s limited hours of operations – and drop in sales – authorities are allowing them to continue working without disruption
• The anti-corruption body (Nazaha) announced the filing of 117 corruption cases against individuals accused of exploiting governmental efforts to combat COVID-19 for private financial gain. The majority of cases centred on bribery charges relating to operational work at the Ministry of Health, Ministry of Tourism and General Authority of Zakat and Tax

 Stimulus and Economic Measures

• The Government announced that the total number of coronavirus cases has exceeded 50,000, while the death toll increased to more than 300. Government sources have blamed increases in recent weeks on the poor living conditions of foreign unskilled laborers. As a result, the government is working with private firms to improve living environments, while offering incentives and penalties to speed up the compliance process
• Due to the downturn in US financial markets, the Saudi government through the Public Investment Fund (PIF) – the Kingdom’s sovereign wealth fund – quadrupled the value of its US equity portfolio to $9.8 billion last quarter, in a strategic effort to diversify the Kingdom’s holdings away from oil. Stakes worth more than $500 million have been acquired in Boeing, Cisco, Disney and Facebook. Smaller amounts were invested in IBM and Berkshire Hathaway among others

EU

Stimulus and Economic Measures

• The European Commission proposed country-specific recommendations, providing economic policy guidance to Member States in the context of the COVID-19 pandemic. The recommendations offer advice both on short-term measures aimed at tackling the adverse impacts of the pandemic and on short to medium-term strategies encouraging sustainable growth
• EU Executive Vice-President for Competition Policy, Margrethe Vestager, has expressed concern over the significant differences between the public aid distributed by some Member States to deal with the crisis. She said that the vast amounts of state support provided by countries such as Germany could have a negative impact on the single market and slow economic recovery. Such considerations are likely to be addressed by the European recovery plan expected at the end of May

Germany

Exit Strategy for business

• Continued salary payments for parents extended: The cabinet has decided that parents will in future receive compensation for loss of earnings for up to 20 weeks. The regulation applies to parents who have to look after children up to the age of twelve and are therefore not in a position to work.
• Opening of more cultural institutions: The Conference of Ministers of Culture (Kultur-MK) and the Minister of State for Culture and the Media, Monika Grütters, have agreed on key points for a planned opening of further cultural institutions and activities and have forwarded these to the heads of state governments and the Federal Chancellor. The key points contain recommendations and criteria for reopening art and cultural institutions.
• Protection for the healthcare system: The Federal Government has moved to protect security-relevant companies in the healthcare sector from takeovers from non-EU countries. These are companies involved in the production of personal protective equipment, drugs and vaccines. A proposed acquisition of as little as ten per cent of such companies by foreign entities will be reviewed by Federal Government under the proposals.
• Key points for voucher solution agreed: The Federal Government has adopted key points for a new regulation aimed at the travel sector. In the case of cancelled package tours, tour operators can offer customers vouchers on a voluntary basis – instead of an immediate reimbursement of the travel cost. The regulation seeks to protect tour operators in the current crisis.

Stimulus and Economic Measures

• German-French Initiative: Chancellor Merkel and French President Macron exchanged views on the coronavirus pandemic over a video conference. Merkel and Macron proposed a German and French initiative for Europe’s economic recovery post-COVID-19. Both have backed an ambitious reconstruction fund of 500 billion euros. The economic recovery fund will provide EU budget spending with a focus on investments in the areas of ecological and digital change should be encouraged.

The Franco-German initiative for Europe’s economic recovery provides for:

1. strategic sovereignty in the health sector – development of an EU “health strategy
2. the establishment of an ambitious economic recovery fund at EU level for solidarity and growth
3. accelerating the Green Deal and digitisation
4. strengthening the economic and industrial resilience and sovereignty of the EU and giving new impetus to the internal market

Such a programme would require the unanimous approval of all 27 EU Member states.

South Africa

Exit Strategy for business

• South Africa maintains Level 4 restrictions with an expectation to see an easing to Level 3 in early June. This is despite the fact that the infection numbers have increased by nearly a 1,000 cases a day, every day, this week.
• The National Coronavirus Command Council and Cabinet have approved the reopening of schools as of 1 June 2020. Independent and public ordinary schools will open and every school is expected to adhere to the health and safety protocols that will be put in place. Return to school will start with grades 7 and 12 and small schools. The other grades will follow in due course.

 Stimulus and Economic Measures

• National Treasury has expanded the eligibility criteria for the employment tax incentive previously announced. This is a measure to encourage firms to hang on to their workforce during the crisis.
• Absa, the financial services group, has forecast that GDP in South Africa would contract in the second quarter by 23.5% quarter on quarter. It particularly expects an adverse impact for mining, manufacturing, and various service industries supporting tourism.