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

• All non-essential shops will be allowed to reopen from 15 June in England. The move is “contingent on progress in the fight against coronavirus” and retailers will have to adhere to new guidelines. Outdoor markets and car showrooms will be able to open from 1 June
• Appearing before the House of Commons’ Liaison Committee, the Prime Minister Boris Johnson was pressed to consider amending social distancing guidelines from 2 metres to 1 metre, a move that many believe could make a significant difference for businesses, especially pubs and restaurants, as well as public transport users
• Dozens of travel firms and hotel owners have said the UK should scrap plans to force visitors to quarantine on arrival, with the industry worried that it will severely reduce demand
• An online ‘test and trace system’ has launched in England and Scotland. People with symptoms should ask for a test online and then, if positive, provide contact details for people they have been in contact with. Tracers will contact them and ask them to self-isolate. Northern Ireland has its own version of the programme already and Wales is due to follow suit early in June.

Stimulus and Economic Measures

• The Chancellor Rishi Sunak has announced plans to bail out UK companies whose failure would disproportionately harm the economyand has authorised a bailout plan, “Project Birch”, to save strategically important companies. Project Birch would be utilised by companies who have exhausted all other options, including other available Government loan schemes.
• The Government has confirmed £300m for local authorities to develop their plans for identifying and containing potential outbreaks in workplaces, housing complexes, care homes and schools.
• The Government has also announced a £50m Reopening High Streets Safely Fund for councils across England to prepare for the safe reopening of the high street and other retail spaces.
• The Government is set to announce a series of changes to the furlough scheme in coming dayswith the Chancellor expected to unveil details intended to bring employees back to work on a part-time basis.
• The Treasury is expected to extend the self-employment income support scheme that currently pays two million people up to £2,500 a month, in some form. HMRC has revealed that more than £6.8 billion has been claimed via 2.3 million applications from those who are self-employed and unable to work

Ireland

Exit Strategy for business

• The Irish Government has confirmed that it will be obligatory for passengers arriving from overseas to self-isolate for 14 days and complete a Covid-19 Passenger Locator Form, which will capture contact details and details of where the passenger intends to self-isolate. The Regulations are effective from 28 May. The self-isolation rules for overseas visitors have been criticised by some in the aviation sector. Ryanair group chief executive Michael O’Leary called the measure “simply political game-playing”
• The Irish Government and its Chief Medical Officer Tony Holohan have reaffirmed its advice that social distancing guidance should remain at two metres. The clarification came following claims from some sectors and opposition politicians that the Government is being “extremely cautious” and the process of lifting certain restrictions should be expedited

Stimulus and Economic Measures

• Taoiseach Leo Varadkar has indicated that the Irish Government is minded to extend the Pandemic Unemployment Payment (PUP) and the Wage Subsidy Scheme beyond the current 8 June cut off date. It is thought the Government will budget for an additional €6.8 billion to cover cost of extending the current payment schemes
• Following queries, the Government clarified that the Pandemic Unemployment Payment (PUP) is a taxable source of income

UAE

Exit strategy for business

• All Dubai Government employees will return to their workplaces from 14 June, Sheikh Hamdan has announced. The Crown Prince of Dubai said 50 per cent of staff shall resume work at offices from Sunday, 31 May, with the entire workforce following suit two weeks later
• The UAE Ministry of Education has announced a programme of distance learning continuity from Wednesday, 27 May onwards, across all public and private schools

Stimulus and Economic Measures

• Abu Dhabi Global Market, ADGM, the International Financial Centre in Abu Dhabi, has announced amendments to its founding law, Abu Dhabi Law No. 4 of 2013 Concerning Abu Dhabi Global Market – the Founding Law
• The Dubai Financial Services Authority, DFSA, has announced that it will be hosting ‘RegTech Live: Driving Compliance Through Innovation’ on 2 & 3 June
• The Zakat Fund has offered aid valued at AED 86.3 million to 5,109 eligible families since the start of 2020

KSA

Exit Strategy for business

• The Saudi Government will allow a partial lifting of full lockdown measures starting 31 May, with the aim of a full return to pre-Covid-19 conditions by 21 June. The announcement included lifting the ban on communal prayers and a gradual return to the office for both the public and private sector. However, the situation will be kept under careful monitoring and certain measures might be brought back, if necessary
• The civil aviation regulator has announced that all domestic travel will be resumed on 31 May to all cities within the Kingdom. While no formal date was set for international travel, many expect the government to open up air travel sometime in early July

Stimulus and Economic Measures

• The Saudi Government has announced the automatic extension of all visitor visas, with no fees charged, for individuals who were stranded inside the Kingdom
• The Ministry of Tourism announced the temporary suspension of all special fees charged to hospitality and tourism companies
• Saudi Aramco, the global oil company, halted oil production at a neutral zone it shares with Kuwait as part of a globally coordinated effort to stabilize oil prices and ensure a higher level of revenue
• The Ministry of Housing cancelled its financial backing of two mortgage support programmes due to the ongoing crisis of Covid-19, as well as the slump in global oil prices. The two programmes were introduced in 2017 to help increase the percentage of Saudi homeowners

EU

Stimulus and Economic Measures

• On 27 May, the European Commission published its much anticipated proposal for the 2021-2027 EU long-term budget which included a European Economic Recovery Plan.
• The EU executive proposed the creation of a new recovery instrument, Next Generation EU. This instrument will bring €750 billion in fresh funds, which will be borrowed by the Commission on the financial markets by end of 2024.
• The funding will be made available through various EU programmes seeking to aid economic recovery, incentivise private investments and address lessons from the crisis.
• The recovery package will include €310 billion in grants and €250 billion of loans, which will be made available subject to specific conditions to all Member States. Focus, however, will be especially be on those countries most affected by the crisis.
• The funds will be “repaid over a long period of time throughout future EU budgets – not before 2028 and not after 2058.” For the purposes of repayment, the Commission is considering a number of new revenue sources including an extension of the Emissions Trading System to include maritime and aviation sectors, the introduction of a carbon border adjustment mechanism as well as a digital tax on companies with large global annual turnover.
• The New Generation EU instrument will top up the reinforced long-term EU budget for 2021-2027 bringing the total financial firepower of the EU budget to €1.85 trillion.

Germany

Exit Strategy for business

• Federal Government and States:The corona-related contact restrictions are extended until 29 June. This was agreed by the federal government and the states. Decisions on visits from relatives, domestic travel and leisure activities are made by the Länder.

Stimulus and Economic Measures

• Support package for SMEs: Federal Minister of Economics Peter Altmaier (CDU) has proposed a new support package for small and medium-sized businesses (including self-employed and freelancers) impacted by the crisis. The package, totaling at least €25 billion, enables companies with up to 249 employees to receive up to €50,000 per month from June to December 2020. Separately, the Federal Government is working on a comprehensive economic stimulus package to revive the overall economy, expected in June.
• Parliament approves lower VAT for catering industry: The VAT rate for food in the restaurant trade is to be reduced from 19 to 7 per cent. The regulation is to apply from 1 July 2020 and will run until 30 June 2021.
• Preparations for stimulus measures for car industry: On 26 May, Federal Minister of Economics Peter Altmaier continued discussions with representatives of the working group for economic stimulus measures, with a focus on quickly reviving the automotive industry. The working group headed by Federal Minister Altmaier will draw up a concept paper which will form the basis of the next “car summit” to be chaired by Chancellor Angela Merkel at the beginning of June.
• Vocational Training in Focus: The heads of the Alliance Partners for Education and Training agreed on measures to cushion the impact of the corona pandemic on dual training. Representatives adopted a joint declaration allowing trainees to continue their training and take their exams despite the current situation.
• Government to support Lufthansa: At the meeting of the so-called Economic Stabilisation Fund Committee (WSF Committee), the German Government agreed on a comprehensive support package for Germany’s largest airline, Lufthansa.

South Africa

Exit Strategy for business

• South Africa is expecting to be at Level 3 as of Monday, 1 June with the national curfew (8pm – 5am) being lifted
• This means that all economic sectors will be reopened, albeit with restriction which include:
  • Public entertainment centres, parks, fitness centres and sports grounds all remain prohibited to members of the general public
  • The consumption of alcohol on premises other than your home is prohibited
  • The sale of tobacco products remains prohibited
  • In terms of property owners, evictions are prohibited during the level 3 lockdown
• The regulation requires that every company must have a Covid-19 plan and a compliance officer. This plan should be known by both the employer and employees and must be available for inspection
• The following activities will be permitted:
• Sale of liquor will be permitted between Monday- and Thursday and between 9am – 5pm
• Open travel between provinces and districts for students and teachers
• Increased exercise times – provided it is not done in groups and people wear masks
• Most people may return to work. However, there will be limits on the number of people in the workplace, with 1.5 metres distance needed between workers
• Food will be available from restaurants and takeaways for collection and deliver
• No inter-provincial travel except for funerals or for essential services
• Domestic travel will be allowed for business travellers
• The revised lockdown levels will be applicable to all areas in the country, with the exception of districts which have been declared as hotspots.  Depending on the severity of cases in these hotspots, the government may impose stricter lockdown rules in those areas in an effort to curb the spread of the coronavirus.
• Hotspot areas include: The City of Cape Town; Tshwane; City of Johannesburg; Ekurhuleni; eThekwini; Buffalo City; Nelson Mandela Municipality; The City of the Cape town; A number of Western Cape municipalities such as the Overberg, Cape Winelands, and Chris Hani

Stimulus and Economic Measures

• While the government has instituted a number of economic stimulus measures, the reality is that the economy was flagging and in a technical recession even before the Covid-19 pandemic risk resulted in lockdown. After a recent downgrade to junk and the economic fallout of the ongoing lockdown, the current projections from government estimates that South Africa will see a 10% contraction in the economy this year.