Salary for the state account, allowances for parents, cheap loans and deferred taxes. What else are the authorities of different countries ready to pay to help business and withheld the pandemic?
The world economy is plunging into crisis. Coronavirus first paralyzed some production facilities in China, then stopped hundreds of businesses in Europe and Asia, followed by the U.S.
A sudden failure in the global economy provoked a global recession in 2020. According to analysts of the S-P, the annual growth of world GDP will not exceed 1-1.5%. The mildest scenario is a repeat of the 2009 crisis.
The International Labour Organization predicts that about 25 million people may be unemployed because of the coronavirus pandemic. Yet we have received positive news about the vaccine and the United Kingdom became the first country to approve it, but still, we are very far from the ending.
What strategies did countries use to withhold the pandemic and support the business? In this article, we will have a look at this subject.
To avoid the damages brought by the coronavirus pandemic, Norway decided to implement financial support for businesses and allocated money for the ones that were forced to shut down because of the pandemic.
With minimal economic loss due to the Covid-19 pandemic, most of the Norwegians were able to avoid further complications. The Norwegian government feared that the pandemic would be a problem regarding an online gambling addiction, but statistics showed that there was not an increase in this regard. However, based on this source here, it may be that Norwegians were still gambling without the government realizing. Most companies that accept Norwegian citizens are outside of the country, so tracking activity on them is quite challenging and often inaccurate. At the same time there are strict regulations regarding gambling in the country.
On March 17, the UK Treasury announced measures to support the business. In particular, the companies were provided with loan guarantees for 330 billion ($400 billion), which according to Finance Minister Rishi Sunak, makes up 15% of the country’s GDP. The maximum loan size will be increased from 1.2 million to 5 million (from $1.5 million to $6 million), with interest may not be paid for the first six months. Small businesses in retail, hospitality and tourism were exempt from the commercial tax during the epidemic. Britons in financial difficulties were granted a three-month mortgage reprieve.
On 23 March, the German Government adopted a package of assistance to private entrepreneurs and companies, as well as to various groups of the population, who were severely affected by the spread of the new coronavirus. According to Chancellor Angela Merkel, this was an unprecedented package of aid to companies. In particular, a fund was created to help large enterprises for €600 billion (and the state reserves the right to buy a stake in strategically important companies if necessary). Small firms and private entrepreneurs were able to receive direct subsidies of up to 15 thousand euros, for this purpose allocated 50 billion. Landlords were prohibited from terminating contracts with tenants who will not be able to pay rent due to financial difficulties due to the coronavirus situation. German hospitals received support in the amount of more than 3 billion dollars.
On March 11, the Italian Council of Council of Parliament decided to allocate €25 billion to support families and companies in an emergency. The state allocated at least 3.5 billion payments on loans and mortgages of business and population to finance the health care system – they will be covered by state guarantees for banks. Special payments were provided for Italians who cannot work because of quarantine. Working parents were offered a special voucher for the amount of €600 to compensate for the services of the nanny. It was available to families with children under the age of 12. Parents working in the private sector could take paid leave and receive up to 50 per cent of the allowance if the family has a child under the age of 12. All employees with a total income of no more than 40,000 per year, who continued to work in quarantine and emergency conditions, were able to receive a small bonus – up to 100. In total, the support of families and entrepreneurs was provided for 10 billion dollars.
What other measures were taken?
We mentioned particular countries that decided to adopt measures to support businesses but there were other things from the national governments to curb the pandemic.
The first thing that certainly comes to our attention is the distribution of face masks. As soon as the virus emerged people were obliged to wear masks both inside and outside. To incentivize people into wearing them, governments decided to give them away without any charge. Such a thing was aimed at raising the percentage of wearing a face mask, which is essential to stop the spread of the virus.
Another thing was helping people who were left without jobs with money. A lot of citizens received money from the government and they were able to ease the hardship that Covid-19 brought to them.
Countries also sacrificed tourism, because more people means more chances for the spread of the virus, which is a huge problem. We should also note that while countries opened borders they had very strict measures which included quarantine for 2 weeks and the negative coronavirus test.
Are these measures enough to combat the virus?
Of course, economic measures are not the only solution to combat the pandemic unless the vaccine is distributed. High social responsibility from citizens is also essential to diminish the rate of the coronavirus infection and the WHO suggests that by the next winter we will be able to return back to our previous lives.