Economic Policy Response Map

Note: The map summarizes the size of fiscal measures in response to the ongoing Coronavirus crisis in each country (announced or enacted) and the ratio of these to nominal GDP (% of GDP). It also reports the liquidity measures (announced or enacted) in size and in % of GDP. The main categories of measures by the government are then listed, in no particular order. Some detail on these measures, as well as further sources for detailed information is then listed below, on this page.

Information is gathered from various national government resources, published announcements and enacted law and various repositories. This is work in progress. The measures mentioned are not a full list of measures discussed. Additional health expenditures, which have been made in almost all countries, are not explicitly mentioned. % of GDP based on nominal GDP 2019. Where only a range of the size of the fiscal package for the country has been announced, I use the average.

Germany:

The German government announced on 13.03: “a far-reaching package of measures to protect jobs and support companies. The government is setting up a protective shield for employees and companies. The goal is to equip businesses with sufficient liquidity that they will be able to make it through the crisis in good shape.” “The government’s central message is that there is enough money available to tackle the crisis and it is going to use this money now. We will take all the necessary measures. That is something everyone can rely on.”

"A protective shield for employees and companies: Package of measures to mitigate the impact of the coronavirus

1. Making reduced hours compensation benefit (Kurzarbeitergeld) more flexible

2. Tax-related liquidity assistance for businesses:

- the options for deferring tax payments and reducing prepayments will be enhanced, and enforcement rules will be adapted. Overall, businesses will be able to defer billions of euros in tax payments.

- Revenue authorities will be able to defer taxes if their collection would lead to significant hardship.

- Enforcement measures (e.g. attachment of bank accounts) and late-payment penalties will be waived until 31 December 2020 if the debtor of a pending tax payment is directly affected by the coronavirus.

3. A protective shield worth billions for businesses

- The German government will protect businesses with new measures to provide liquidity, the volume of which is unlimited. Due to the high degree of uncertainty in the current situation, the government has very deliberately decided to not set any limits on the volume of these measures.

Еxisting liquidity assistance programmes will be expanded to make it easier for companies to access cheap loans. This can mobilise a large volume of liquidity-enhancing loans from commercial banks. The measures include also the additional funding already given to the Health Ministry and the Robert Koch Institute."

Italy:

Italy has announced on the 17. March the Cura Italia emergency package making 25 billion € available as an emergency fund, with around 12 billion € expected to be used for immediate healthcare spending, bridge loans for SMEs, postponement of tax duties and broader job protection (this results in an increase of 20 billion € in net spending, 1.1 % of GDP).

(Please, take not, all of the below is from draft proposals, not enacted laws. It is just for informative purposes and does not imply any final policies implemented by the Italian government, which are still being discussed. Information comes from ilsole24.ore and repubblica.it).

The drafted proposals include:

• "Support for the liquidity of households and businesses through the banking system". "A procedural simplification for the suspension of first home loans up to 18 months in case of reduction or suspension of working hours - and possible suspension of the installments of mortgages and bank loans by extending their duration with partial support of state guarantees and the possibility of increasing the percentage of guarantees". "We are evaluating measures on the possible difficulties of paying rents in order to avoid that it also has an impact on owners who may have to pay taxes on a rent installment that they cannot collect".
• "For families, but also for businesses, access to the moratorium on mortgages should be widened and made easier. Even those who remain without work due to "reduction or suspension of working hours" should be able to ask for help from the Solidarity Fund "Gasparrini", which provides for the suspension up to 18 months of the installments on the first house. "
• "Measures of suspension of the fiscal and contributory payments, also in preview of a future partial refreshment".
• "As far as liquidity, the government is working with Abi and Bankitalia to build a broad credit moratorium in order to guarantee several tens of billions, again with a probable partial public guarantee. A strengthening of the Central Guarantee Fund for small and medium-sized enterprises is also planned" "Strengthening of the Guarantee Fund for SMEs - for the companies that have been overwhelmed by the Coronavirus emergency, an increase with resources of one billion of the Guarantee Fund for SMEs is planned."
• "For families - 15-day leave or €600 voucher: a fortnight's extraordinary leave at 40% pay, which could rise to 50%. It will be available to all employees, private and public, and probably also to the self-employed, with children up to the age of 12. As an alternative to extraordinary leave, you can opt for a sort of "babysitter voucher" worth 600 euros, which will be credited to the family booklet. For health workers the voucher will be more substantial: one thousand euros."
• "For health care, in recent days, extraordinary measures have already been taken, starting with the hiring of 5,000 new doctors, including the unemployed, trainees and pensioners. In addition, steps have been taken to hire 15,000 nurses and health workers. "
• "Other features: postponement of the last extended graduation session in June, the postponement of car revisions, a voucher for the reimbursement of shows, reduced bills, extended tax payment deadlines beyond 16 March, further suspensions of the deadlines and tax measures to support businesses, professionals and VAT numbers affected by the effects of the health emergency."
• "With regard to payments, work is being done to support VAT registration holders, identified on the basis of turnover, for whom the current measures to contain the spread of the COVID-19 virus have had a greater impact on liquidity. Smaller entities and entities in the sectors most affected, regardless of size, will have suspended payments due in March."
• 25 billion euro: 3.5 billion euros to support the healthcare system; 10 billion to support families and workers (extends parental leave, offers funds to families to pay for babysitters, and suspends all firing procedures)

UK

On 20.03.2020, the UK Chancellor Rishi Sunak announced a Plan for People's Jobs and Incomes with a focus on protecting jobs in the UK economy. The plan includes a commitment by the UK government to cover 80% of the salary of retained workers, up to a total of £2,500 a month. The scheme covers the cost of wages backdated to March 1st and will be open before the end of April for at least 3 months, with no limit to the sum that can be requested. Further to that, a ‘Coronavirus Business Interruption Loan Scheme’ will be available, interest-free, for 12 months. Furthermore, a VAR tax-deferall for the next quarter has been included. Business therefore will pay no VAT tax for Q2 of 2020 and will have until the end of the year to repay it, which equals an injection of £30bn (1.5% of GDP)." Increase in the Universal Credit standard allowance, for the next 12 months, by £1,000 a year and an increase in the Working Tax Credit basic element also by £1,000 a year. Suspension of the minimum income floor for self-employed people, so that they are able to access Universal Credit. £6bn of extra support through the welfare system and a deferall of self-assessment payment until Jan 2021. "For renters, I’m announcing today nearly £1bn of support by increasing the generosity of housing benefit and Universal Credit, so that the Local Housing Allowance will cover at least 30% of market rents in your area. "

France

• The initial fiscal package of €45 billion (2 % of GDP) has been revised to €100 billion (4 % of GDP)
• €310 billion (13 % of GDP) of state guarantees for bank loans to companies
• In addition to health measures, resident also announced a host of economic and social measures to support employment and businesses, many of which are suffering from the effects of the virus, particularly in the fields of tourism, events, culture and transport.
• "When it comes to employees, the French leader announced the implementation of an “exceptional and massive mechanism of partial unemployment” ("chomage partiel"). For companies, it will be possible to postpone “without justification, without formality, without penalty [the] payment of contributions and taxes due in March”."
• More info here and here

Netherlands

"Unprecedented economic measures, ... designed not only to protect our health, but also to protect people's jobs and livelihoods and to minimise the impact on self-employed people, small and medium-sized enterprises and major companies. Under the newly announced measures, billions of euros will be invested into the economy every month, for as long as necessary. The measures will ensure that companies are able to pay their employees' wages, grant a bridging arrangement for self-employed people and allow companies to hang on to their money through relaxed tax provisions, allowances and supplemental lines of credit."

• From the IMF Policy Tracker: "The package includes spending measures of about 10-20 billion euros (1-2 percent of GDP) in the next three months, and covering (i) compensation of up to 90 percent of labor costs for companies expecting a reduction in revenues of 20 percent or more; (ii) compensation for affected sectors (hospitality, travel, and others); (iii) support for entrepreneurs and the self-employed; (iv) scaling up of the short-time working scheme (unemployment benefit compensation available to companies needing to reduce their staff by at least 20 percent). "

Belgium

Denmark:

• Discretionary fiscal support up to DDK 60 billion (2.5 percent of GDP)
• Three month aid period in which the government offers to compensate 75 % of workers wages at a maximum of 23,000 Danish krona ($3,288 ); employees also asked to take 5 days of mandatory vacation or time off of work; the programme can grow up to maximal size of 287 billon DKK (13 % of GDP)
• State guarantees on 70 percent of new bank loans to companies. This will encourage more lending even in the case of more bankruptcies.
• Unemployment benefits conditionalities are put on hold (visiting re-education and job centers); the maximum length for receiving unemployment benefits (2 years) is also frozen.

Austria

• Overall, the corona aid packages thus reach a potential maximum volume of 38 billion € (about 10 percent of the 2019 nominal GDP).
• First corona aid package of 4 billion € including: Hardship fund for one-person businesses, micro-enterprises, self-employed persons; short-time working compensation (Kurzarbeit); additional healthcare expenditures, partial coverage of wage costs
• Second corona aid package of 34 billion € including: credit guarantees, emergency fund for particularly affected sectors, tax deferrals and deductions
• More information here and here

Spain

• Information on size and measures: here and Algebris (still in progress and to be implemented)
• entitlement of unemployment benefit for workers temporarily laid off under the Temporary Employment Adjustment Schemes (ERTE) due to COVID-19, with no requirement for prior minimum contribution or reduction of accumulated entitlement
• increased sick pay for COVID-19 infected workers or those quarantined, from 60 to 75 percent of the regulatory base, paid by the Social Security budget
• an allowance for self-employed workers affected by economic activity suspension
• a temporary subsidy for household employees affected by COVID-19 with an amount equal to 70 percent of their contribution base
• a temporary monthly allowance of about EUR 430 for temporary workers whose contract (at least two months’ duration) expires during the state of emergency and are not entitled to collect unemployment benefits
• transfer of €25 million to autonomous communities funding meals for children affected by the school closure
• Exemptions of social contributions by impacted companies that maintain employment under the ERTE
• tax payment deferrals for small and medium enterprises and self-employed for six months (€14 billion)
• a 6-month interest-free suspension of social security contributions for the self-employed

Ireland

Portugal

Lithuania:

IMF Policy Tracker and OECD Tackling coronavirus (COVID 19)

Latvia

Estonia

Slovenia

Finland

Global Responses:

The European Commission has announced it will enable member countries to apply the full flexibility provided for in the EU fiscal framework so that they can implement the measures needed to contain the coronavirus outbreak and mitigate its negative socio-economic effects. The Commission has announced in mid-March the Corona Response Investment Initiative:

"The Corona Response Investment Initiative is designed to support SMEs, health care systems, labour markets and other vulnerable parts of the economy. In order to rapidly mobilize EUR 25bn of European public investment to cope with the consequences of the crisis, the Commission will propose to waive this year the obligation to request repayment of unspent pre-financing for European Structural and Investment Funds currently held by member states. The member states will be obliged to use these amounts to accelerate their investments under the Structural Funds. This will be used for national co-financing they would normally have had to provide themselves to receive the next tranches of their structural fund envelopes. Given the average co-financing rates in the member states, the EUR 7.5 bn can trigger the release and use of some EUR 17.5 - 18 bn of Structural Funds across the EU.

The response of the Commission will also include the activation of the flexibility of fiscal rules, as well as fiscal measures of significant proportion to counter the economic shock. These could be provided by the European Investment Bank in countries that do not have their own state romotional bank and the funds will need to go mostly to the very indebted countries, as well as countries with a less developed banking system. "

European Central Bank - €750 billion Pandemic Emergency Purchase Programme (PEPP)

To launch a new temporary asset purchase programme of private and public sector securities to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, COVID-19.

For the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks. At the same time, purchases under the new PEPP will be conducted in a flexible manner. This allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.

The Governing Council will terminate net asset purchases under PEPP once it judges that the coronavirus Covid-19 crisis phase is over, but in any case not before the end of the year.

The Governing Council will do everything necessary within its mandate. The Governing Council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as long as needed. It will explore all options and all contingencies to support the economy through this shock.

To the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the Governing Council will consider revising them to the extent necessary to make its action proportionate to the risks that we face. The ECB will not tolerate any risks to the smooth transmission of its monetary policy in all jurisdictions of the euro area.