Following the European Commission’s green light to EU Member States allowing for fiscal rules to be flexed to accommodate additional spending in light of the economic disruption caused by the spread of coronavirus, Governments across the continent have announced a raft of measures intended to support struggling employers and ensuring that workers are not left behind.
These measures include direct payments covering employees’ salaries, cash grants and low-interest loans to ensure business continuity.
Among the most significant direct initiatives, Denmark has sought to ensure job losses are kept to a minimum by allocating a significant budget to pay employees 75% of their salary if businesses promise not to cut stuff.
Germany announced loans of practically unlimited size to all businesses, irrespective of their size, in a radical step to ensure a recession is avoided. Both small and large businesses will be offered loans along with tax holidays covering billions of euros in tax.
The United Kingdom announced a special budget of historical proportions, worth close to 14 billion euro which includes guarantees for bank loans, tax cuts for retailers, cash grants for SMEs, sick pay for people who need to self-isolate, and expanded benefits for the self-employed and the unemployed.
Despite ballooning debt levels, Italy has announced a 25 billion-euro plan which allocates direct grants to companies hit particularly hard by the virus and provides assistance for workers facing layoffs. Italy, a country where the self-employed constituted a significant backbone of the economy, has allocated a grant of 600 euro to members of this category, added to the suspension of social security contributions. This grant will be paid in March, with Prime Minister Conte considering its extension to next month if the crisis prolongs.
Sweden, a nation with a population of just over 10 million also presented yesterday evening a significant package of measures worth 27 million euro to support the economy. Through this package, Government covered the full cost of sick leave for companies up till May while also carrying the cost for temporary redundancies due to the crisis. A significant chunk of this budget was allocated to loans to companies and directed to banks to maintain the supply of credit.
So far, the Maltese Government has promised tax breaks to affected businesses – covering provisional tax, VAT and social security contributions for the next two months as well as incentives for those businesses who invest in teleworking. Keep track with COVID19 developments in Malta with our constantly updated bulletin.
In addition to this, the EU will put a package of measures in place including a €37bn euro investment initiative. The EU also intends to guarantee €8bn in loans to 100,000 companies to support the corporate sector.