Favorite (8)
Negative economic effects can hardly be quantified
All measures taken are important and sensible for the health of all of us. However, they will also have major negative consequences for our economy - for all of us!
Events are canceled, supply chains are already interrupted, productions have stopped, research projects have to postpone their work, etc. This affects us all. Of course, small and medium-sized companies that do not have a large financial cushion are hit particularly quickly and hard.
But governments in Europe offer generous help to the domestic economy.
The European Commission is taking action at European level to mitigate the socio-economic impact of the COVID 19 outbreak and to focus on a coordinated European response.
State aid framework flexibility
The main tax response to the coronavirus will come from the national budgets of the member states. EU state aid rules allow member states to quickly and effectively take measures to support citizens and businesses, particularly SMEs, who experience economic difficulties as a result of the COVID 19 outbreak.
Member states can design extensive support measures in accordance with existing EU rules.
Mobilizing the EU budget
To provide immediate help to the severely affected SMEs so that their liquidity is guaranteed, in the coming weeks a billion euros will be reallocated from the EU budget to guarantee the European Investment Fund. This gives banks incentives to provide liquidity to SMEs and mid-caps. This supports at least 100,000 European SMEs and small mid caps with around 8 billion euros.
The new temporary framework should allow member states to
Finally, the new temporary framework will recognize the important role of the banking sector in managing the economic impact of the COVID 19 outbreak, namely channeling aid to end customers, particularly small and medium-sized enterprises.
The temporary framework clarifies that this aid is seen as direct aid to the customers of the banks and not to the banks themselves. And it gives guidance on how to minimize inadequate residual aid to banks in line with EU rules.
The UK will set up the so called “Coronavirus Business Interruption Loan Scheme" (CBILS), which mostly consists of two packages:
The aid packages are intended to provide financial relief for small and medium-sized companies and employers. Statutory sickness benefit (SSP) paid out under COVID-19 is said to be recoverable. Larger companies have the option of easily accessing working capital via the Bank of England. The goal is to help companies that are strong from the ground up but are facing a short-term funding shortage so that they can continue to finance their short-term liabilities.
Spain notified two guarantee schemes on new loans and refinancing operations for
The schemes have a total budget of approximately € 20 billion.
The measures are intended to reduce entrepreneurial risks. The granting of company loans is intended to dampen the economic impact of the coronavirus. Companies should remain liquid to maintain jobs and continue their activities.
Other measures intended primarily to strengthen occupational safety are covered by the temporary employment regulations (Spanish acronym: ERTES). Working days can be reduced or shortened. Remote work can be taken as a flexibility measure. Employees in who cannot work due to quarantine are entitled to a contributory unemployment benefit.
In Austria, too, the economy is supported with short-time working models. The government has pledged 400 million euros that should be available for all company sizes and all industries within two days. For the first time, it will be possible for employees to be wholly, i.e. 100 percent at home, while remaining employed in the company. In addition, guarantees for small and medium-sized businesses are increased and are now also available to larger companies. A € 4 billion Corona Crisis Management Fund has been set up. Any company that needs a guarantee should get one.
France is introducing three separate support schemes under the temporary framework.
• Two regulations that allow the French public investment bank Bpifrance to provide government guarantees for commercial loans and credit lines for companies with up to 5,000 employees.
• A system to provide government guarantees to banks for new loan portfolios for all types of companies. This is a direct help for companies, which enables banks to quickly provide liquidity to any company in need.
The French measures are expected to mobilize more than 300 billion euros to maintain liquidity for companies affected by the economic consequences of the coronavirus outbreak.
There are also job security measures in France. Companies receive financial support to shorten the working hours of certain employees and at the same time secure their jobs. Part-time employment agreements (dispositif d'activité partielle) enable companies that experience a sharp decline in their business to reduce the working hours of certain employees and receive state funds for parts of their wages.
The Dutch government announced a rescue package that will be unlimited to support the economy. The financial support is intended to protect jobs as well as to minimize the economic damage for small and medium-sized companies and large companies. The government announces that it will invest billions of euros a month in the economy for as long as necessary. Companies should continue to be able to pay wages or provide a bridging agreement for the self-employed. Looser credit conditions are designed to ensure the liquidity of companies. The government is working on eight measures, including a fund that will make it easier for businesses to claim compensation for loss of income.
Measures that will be implemented.
The Finnish support package amounts to € 15 billion. The main purpose of this is to guarantee loans. The aim is to help companies to survive this crisis, to secure jobs by supporting the crisis caused by the coronavirus
Support for companies an entrepreneurs includes measures
Finnvera's ability to respond to growing demand for finance is increasing from the current € 4.2 billion to € 12 billion. This ensures that Finnvera can guarantee companies' bank loans. In addition, the budgetary authority for Business Finland's troubleshooting activities will be increased from € 30 million to € 150 million.
The Federal Council has decided on a comprehensive package of measures amounting to € 30 billion to cushion the economic consequences of the spread of the coronavirus. About € 40 billion are to be made available. The aim of the measures, which are aimed at different target groups, is to avoid layoffs, to maintain employment, to secure wages and to catch the self-employed. Unemployment insurance funds can claim up to € 7,5 billion for short-time work allowances. The waiting period for short-time work will be reduced to one day from now until September 30, 2020. For particularly affected companies, the Federal Council examines financial support (e.g. for bridging liquidity or financial aid) in the sense of a hardship regulation up to € 1 billion.
The Danish government informed private companies that had to face drastic measures to stem the spread of coronaviruses that they would cover 75% of the employees' salaries, if they assure not to lay off any employees.
During the three-month aid period, which runs until 9 June, the state is offering to pay 75% of workers' salaries with a maximum of about € 3.000 per month, while companies pay the remaining 25%.
The offer is one of several economic aid packages from the government. A guarantee scheme for SMEs has a budget of € 130 million. It is designed to support companies most affected by the economic impact of the coronavirus outbreak. The aim of the measure is to ensure that these companies can continue their activities in view of the difficult situation caused by the coronavirus.
Since the problem situation can change on a daily basis, it is advisable to get regular information on the following website:
In the IVAM office, too, we have reacted to the current conditions. For this reason, we have taken the following measures:
With these measures, the IVAM team wants to help to slow down the spread of the virus so that the health systems can cope with the effects.
"Despite all this government aid, we are all facing tough times. Let's do it together! We have to react in solidarity to all challenges, protect our employees, support our partner companies that run into financial difficulties. This applies nationally in Germany but also internationally within the EU and all over the world.
We can only solve such global problems with international cooperation. In particular, as an international high-tech company, we can work out solutions together - for the benefit of all." (Dr. Thomas Dietrich, CEO IVAM Microtechnology Network)
