Covid-19 and Government Recovery Plans

It remains unclear how national economies and global markets will be transformed once we emerge from the restrictions in place due to Covid-19. All the while, governments across the globe are grappling with the pitfalls of quickly establishing policy in an ever-changing environment, invariably leading to significant disparities in how different jurisdictions are reacting.

Our Public Policy Teams in London, Brussels, Berlin, Dublin, Riyadh, Johannesburg and Dubai 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

• Number 10 has said a review into the 2m social distancing rule, implemented to stop the spread of coronavirus, will be completed in the coming weeks; however, it’s not clear if it would be done by the time pubs and restaurants in England are due to reopen on 4 July. It comes as some MPs and the hospitality industry have called for the rule to be relaxed to one metre.
• Greggs, the British high street bakers, is planning to reopen about 800 shops for takeaways this week with the rest of its more than 2,000 outlets from early July. Bosses from other leading restaurant chains including Pizza Hut, Wagamama and Itsu, have warned the Prime Minister the sector faces mass job cuts without more help.
• Huge queues formed outside large retailers such as Sports Direct and Nike and on High Streets as non-essential retail stores re-opened in England this week.
• The Health Secretary Matthew Hancock has said that the Government will provide an update on the Covid-19 shielding programme in England “very soon”. Hancock’s comments came after the Health Service Journal reported that the Government was planning to tell clinically vulnerable patients that they no longer need to isolate at home from the end of July.
• In a week that saw Premier League football return, Culture Secretary Oliver Dowden said the Government’s taskforce on restarting sport and culture had made progress regarding the reopening of venues and that the taskforce is preparing to take evidence from experts on how live arts venues can start operating again.

Stimulus and Economic Measures

• The Bank of England will pump an extra £100bn into the UK economy to help fight the “unprecedented” coronavirus-induced downturn after Bank policymakers voted 8-1 to increase the size of its bond-buying programme. However, they said there was growing evidence that the hit to the economy would be “less severe” than initially feared. The central bank decided against moving interest rates into the negative.
• The Chancellor and Treasury are resisting calls for a Budget in July with suggestions they want to be able to view the full extent of issues before making irreversible spending decisions. It is expected a modest stimulus package will be delivered later in the summer.
• Following a high-profile campaign led by England footballer Marcus Rashford, the Government announced that around 1.3 million children will be eligible for the Covid-19 summer food fund which will cost approximately £120 million.
• Universities Minister, Michelle Donelan, has announced £3 million of funding aimed at supporting the mental health of university students in England and Wales.

EU

Stimulus and Economic Measures

• The European Commission is considering further extending the scope of the State Aid Temporary Framework first adopted in March to support the economy in the context of the pandemic.
• The amendment would allow broadening the scope of the current state aid rules in order to allow the provision of state aid to support micro and small enterprises, including start-ups that were already in difficulty before 31 December 2019. It will also allow the provision of incentives for private investors to participate in Covid-19-related recapitalisation measures undertaken by governments.
• The Commission is currently discussing the proposal with Member States.
• Member States are negotiating the Commission’s proposal for a €750 billion European Recovery Fund. Talks are reportedly difficult but according to internal sources, an agreement could be reached in July.

Germany

Exit Strategy for Business

• Coronavirus app launched: Since 16 June, the coronavirus warning mobile app has become publicly available on the operating systems Android and iOS. In a joint press conference, representatives of the institutions involved in the development once again emphasized the advantages and benefits of the app. The app supports the identification of contacts and the interruption of infection chains, said Federal Minister of the Interior Horst Seehofer.

Stimulus and Economic Measures

• Funding for vaccines development: The Federal Ministry of Education and Research is supporting companies in their search for a vaccine against the novel coronavirus. A new funding pot of €750 million will seek to finance two objectives: 1) production capacities are to be increased to allow for any vaccine to be produced in large quantities; and 2) facilitate an increase in the number of volunteers in the late phases of clinical trials.
• German government to invest in vaccine company: The German government is investing €300 million in the biotech company CureVac AG, which is working on a Covid 19 vaccine.
• EU Reconstruction Fund: Federal Chancellor Merkel has stated that coping with the consequences of the current crisis and at the same time making Europe more resilient will be the key focus of the forthcoming German Presidency. The Chancellor emphasized the objective of reaching an agreement in the European Council on both the Multiannual Financial Framework (MFF) and the reconstruction fund as quickly as possible. She stressed that the plan for the reconstruction of Europe was explicitly limited to the pandemic, targeted and limited in time.
• Cabinet approves record indebtedness: With a second supplementary budget of €62.5 billion, the government is looking to inject additional finance to its coronavirus stimulus package. The Bundestag must still vote on the additional loans which are in addition to a budget of €156 billion used to finance several aid packages. For example, and among other measures, the value-added tax is now to be temporarily reduced and a bonus for families with children is to be paid. In addition, small and medium-sized enterprises will be able to receive bridging assistance totaling €25 billion.

Ireland

Exit Strategy for business

• On the 15 June, all retail outlets within shopping centres were allowed reopen. Retail outlets are required to follow the Covid-19 Shopping Centre Recovery and Protection Guide, which addresses risks to workers and the public and details how to implement the mandatory Return to Work Safely Protocol that applies to all workplaces
• On the 17 June, Fáilte Ireland (Ireland’s national tourism development authority) issued Guidelines for the Reopening of Pubs (which include pubs, gastro pubs and bars). Pubs with a license to serve food are allowed to reopen from the 29 June.
• Pubs that offer pre-booked time slots will be able to seat customers for 105 minutes with an additional 15 minutes between bookings, which is two hours in total. Pubs will be required to serve a “substantial meal” for which it would be reasonable to charge not less than €9. Physical distancing of at least one metre should be maintained between people seated at tables
• The National Public Health Emergency Team (NPHET) with the Government has placed a renewed emphasis this week on the wearing of face coverings. It is recommended that they are used in shops, on public transport and when visiting people aged over 70 and those who are medically vulnerable

Stimulus and Economic Measures

• As part of the provisional Programme for Government, the coalition of Fianna Fáil, Fine Gael, and the Green Party have proposed a Recovery Fund which prioritises productive and labour intensive capital investment projects; reskilling of those made unemplyed due to the pandemic; and assistance provided to boost business agility, such as digital and management capabilities
• The Programme for Government, which now seeks the approval of the members of each political party, also includes the committement to launch a new National Economic Plan. Likely to be unveiled in the Autumn, this will seek to “take a long-term view of how we return people to employment in a manner that is sustainable“
• The Department of Agriculture announced the allocation of €50 million to provide for a support scheme for beef finishing farms which have been severely impacted by the economic effects of the Covid-19 pandemic
• In total, 108,000 people have closed their claim to the Pandemic Unemployment Payment and indicated that they are returning to work, since the commencement of Phase 1. Last week, approximately 26,000 people in receipt of the Pandemic Unemployment Payment closed their claim as they had returned to work

KSA

Exit Strategy for business

• The number of Covid-19 deaths in Saudi Arabia surpassed 1,000 on Monday amid a new surge in infections just weeks ahead of the annual Hajj pilgrimage
• Jeddah’s strict lockdown measures and curfew hours continue to be in effect to counter the pandemic
• It is expected that up to 1.2 million foreign workers will leave Saudi Arabia’s job market due to the Covid-19 impact. The sectors that are likely to witness the highest percentage of exits are: hospitality, food services, administrative and support activities
• International flights to and from Saudi Arabia will remain suspended until further notice, the Saudi national carrier Saudia confirmed on Sunday
• Saudi Arabia has decided to lift the ban on sports and sports-related activities starting from 21 June, allowing fitness clubs to resume activity

Stimulus and Economic Measures

• The Saudi Industrial Development Fund (SIDF) has launched a SAR 3.7 billion ($1 billion) stimulus plan to support industrial projects affected by the pandemic. The initiative aims to support more than 500 industrial projects by deferring and restructuring loan instalments for small, medium and large industrial enterprises

South Africa

Exit Strategy for business

More business to operate: President Cyril Ramaphosa has acknowledged that since the national lockdown, many businesses and individuals have not had any income for more than 80 days.  Therefore, there will be amendments to the Level 3 regulations as follows:

• Restaurants can open for “sit-down” meals
• Accredited and licensed accommodation, with the exception of home-sharing accommodation like Airbnb, will be allowed to operate
• Conferences and meetings for business purposes and in line with restrictions on public gatherings will be permitted
• Cinemas and theatres can open, but audience numbers must be aligned to limitations on the gathering of people
• Casinos can open to the public
• Personal care services, including hairdressers and beauty services, are allowed to operate
• Non-contact sport such as golf, tennis, cricket and others will be permitted. Contact sport will be allowed only for training and modified activities with restricted use of facilities

No date for the implementation of these amendments has been announced yet.

Targeted testing: South Africa, will become more targeted in its testing, prioritising patients in hospitals, healthcare workers, vulnerable people like the elderly and hotspot areas.

Stimulus and Economic Measures

Stimulus package floundering: Intellidex has reported that the R200 billion loan guarantee scheme (part of the government’s R500 billion economic stimulus package) to enable banks to lend to businesses suffering from Covid-19 related distress has not worked.  In fact, only a fraction of the fund – around 1% or R2 billion – has been used to date.  The reasons given include:

1. The allocation took too long to finalise, only achieving agreement with the banks on 11 May 2020.  In short, they are being offered loans almost 2 months too late
2. Restrictions on what the loans can be used to pay for are very limiting
3. The repayment terms are not favourable (for the bank or the loan recipient
4. Eligibility criteria for the loans is limited – for example, businesses that are subsidiaries or parts of groups were being turned away

UAE

Exit strategy for business

• Dubai’s Emirates airline plans to open “air bridges” with countries in Europe, allowing travelers to visit countries across the continent without quarantine as governments and health authorities gradually ease lockdown measures
• Government offices in Dubai resumed working with 100 per cent capacity from 15 June onwards, while those in Sharjah resumed with 30 per cent staff
• The Dubai government will allow children and the elderly in malls and other public places from 18 Swimming pools, cultural centres, water parks and other places can now operate at 100 per cent capacity

Stimulus and Economic Measures

• The UAE’s banking sector continues to roll out relief measures to individuals and businesses impacted by the Covid-19 outbreak, with 15 national banks fully utilizing their share of the AED 50 billion liquidity support package provided by the Central Bank of the UAE
• Abu Dhabi’s government has paid a total of AED 8 million ($2.1m) to 220 businesses as part of an initiative that allows certain businesses to recover 20 percent of their annual rent, according to government officials
• The UAE has undertaken more than three million Covid-19 tests and leads the way in the global rankings for screening per capita, Minister of Health Dr Abdul Rahman bin Mohammad bin Nasser Al Owais stated on 17 June