Economic measures for the coronavirus: each other
The impact on the world economy of the COVID-19 coronavirus epidemic has already weighed on growth forecasts for this year 2020, to the point that there is talk of a possible global recession. In addition to treatment as a health emergency and measures taken to combat the spread of the disease, governments are adopting and designing action packages to mitigate the negative consequences on markets, businesses and global trade.
The philosophy with which these emergency measures are being dealt with differs significantly in the Western environment, not only because of the characteristics of the action plans that have been announced so far, but also because of the message they convey to citizens. While the US was lowering rates to provide the system with liquidity so that the money would not come to a standstill, the EU was taking the opposite path, opening the door to more deficits for the member countries of the EU club. Measures for private initiative versus measures for governments. These are the packages of economic measures adopted in the main countries:
The country that has registered the most cases outside China is also the one that has acted most forcefully to combat the virus, although its economic measures to curb its consequences on the Italian economy have not had as much publicity. From Palazzo Chigi they do not want to be left alone in the effectiveness of bans and isolation, and has taken the lead with a plan of seven billion euros, a moratorium on debt payments to companies and families and a guarantee for banks so that credit is not withdrawn. The self-employed will receive direct aid, especially if they are infected and find their professional activity impossible. A centre-left coalition is governing in Italy with the 5 Stars Movement and the Democratic Party.
The world giant wants to stage a home stretch of the coronavirus crisis that appeared in one of its remote regions. President Xi Jinping is visiting Wuhan for the first time since the spreading of the microbe began in December, and he is not doing so because the problems at ground zero are still there, but on the contrary: data are beginning to come in that confirm the improvement, although the restrictions will remain. The authorities, who have acted with an iron hand that is presumed to be that of a dictatorship, already point out that the quarantine is going to be lifted. The number of cases recorded today is the lowest since the national epidemic was confirmed.
After the Federal Reserve's generalist decision to lower interest rates by half a point, unprecedented since the Lehman Brothers crisis, one-off measures are in place. An exceptional situation has to be dealt with through emergency measures. Trump has announced tax cuts and subsidies to the tourism industry and to airlines and cruise lines. He has released an allocation of more than $8 billion to give state governments financial support for their crisis measures. Workers' pay slips will have incentives, sick leave will be paid, and there will be cash in hand for small and medium-sized businesses that have to close down because they register cases of infected workers.
Your Finance Minister Bruno Le Maire is already deducting the fall of several tenths of the French GDP and so has started to move the branches of economic measures. The stimulus plan is aimed at the country's companies, which will be able to postpone the payment of contributions and request relief if they are forced to close down. The government will help small and medium enterprises with money.
Merkel and her Social Democratic partners have not stood idly by in the face of the magnitude of the problem affecting Germany's powerful industry either. Liquidity for companies, more aid for workers who have to reduce their working hours or telework, and a sharp increase in public investment by more than twelve billion euros.
Twenty-four hours after announcing an unspecified emergency plan, the executive has still not approved any measures for economic support, tax incentives or direct subsidies to companies. Nor has it released any amount to address the situation in the autonomous communities. Today only decisions have been announced on health and to prevent contagion in large concentrations, but the economic measures are delayed at least until next Thursday there will be a new council of ministers. The concern that I have repeated the spokesperson Maria Jesus Montero is that companies may be tempted to make hidden employment regulations taking advantage of the crisis of the virus, which promises imminent measures against SMEs in this regard.
The political opposition to the left-wing coalition government is calling for fiscal aid for companies, especially those in the tourism sector, to maintain the flexibility of the labour market, to postpone the collection of VAT and advantages for the self-employed, who are the driving force behind the small activity of the system.