While emerging from 10 Downing Street on Wednesday, chancellor Rishi Sunak’s notes were caught by cameras ahead of a meeting with newly elected Conservative MPs.
Among the phrases glimpsed was a reassurance that there would not be “a horror show of new taxes with no end in sight” as the country seeks to overcome its short-term financial challenges.
Recent opinion polls have seen the Conservative Party’s lead over the Labour Party beginning to narrow, giving rise to concerns among Conservative MPs who won seats from traditionally Labour-voting areas – the so-called “red wall” – regarding the government’s policies. An unnamed “red wall” Conservative said that U-turns regarding the wearing of face masks, school meal funding and A-level exam results had made MPs in marginal areas “jittery”, according to the Press Association.
Anxieties have been heightened by the COVID-19 pandemic and the costs it has incurred through government interventions, driving predictions that corporation tax will be raised in order to compensate. The government has thus far dismissed this as “speculation”.
Chancellor Sunak’s statement, which was to be read out in Parliament in an address to Conservative MPs elected in 2019, offered reassurances that the government “will be able to overcome the short-term challenges."
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"Now this doesn't mean a horror show of tax rises with no end in sight,” the statement continued. “But it does mean treating the British people with respect, being honest with them about the challenges we face and showing them how we plan to correct our public finances and give our country the dynamic, low-tax economy we all want to see.”
The chancellor also noted during his address that unlimited borrowing cannot be the solution to government expenditure. "We cannot, will not and must not surrender our position as the party of economic competence and sound finance," he said.
Scotland-based renewable energy producer SSE has been fined £2 million by the Office of Gas and Electricity Markets (Ofgem) for failing to publish timely information about the future availability of its generation capacity, the government body reported on Thursday.
Ofgem stated that the disclosure breach related to capacity at the Fiddler’s Ferry power station, which is under SSE’s contract with National Grid. The failure to disclose relevant information could have had a “significant effect” on wholesale electricity rates.
While SSE had not “acted in bad faith,” the steepness of the fine “sends a strong message” to all entities in the energy market, Ofgem stated.
Martin Pibworth, SSE’s Energy Director, conceded in a separate statement that SSE’s approach to disclosure was not in line with Ofgem’s requirement for disclosure to the market at an earlier stage, but emphasised that the company acted in good faith and published contract details “in line with our interpretation of the REMIT regulations at the time.”
“SSE did not benefit from disclosing only once the contract was signed and remains committed to clear and transparent rules for all market participants. We will be pressing regulatory authorities for additional guidance for market participants going forward,” he continued.
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Ofgem confirmed that SSE qualified for a 30% discount on the predicted penalty due to its early settlement and cooperation during the investigation.
The £2 million fine was the first of its kind to be issued in the UK and Europe for failure to achieve “effective and timely” disclosure of insider information under REMIT (Regulation on Energy Market Integrity and Transparency).
On 1 September, the Coronavirus Job Retention Scheme (CJRS) entered its final phase.
The scheme, first implemented in March, enabled UK companies to place employees on furlough, meaning they would not work but would have 80% of their salary reimbursed by the government, up to £2,500 per month. The government would also pay National Insurance and pension contributions, though this has been shifted back to employers as of 1 August.
Now, the proportion of wages paid has also shifted, and employers will be expected to pay 10% of furloughed employees’ wages while the government accounts for 70% -- up to a cap of £2,187.50 per month.
New legislation has also ensured that employees who are made redundant while on furlough will be entitled to redundancy pay equal to their normal working pay rather than the proportion of wages they have received while on furlough.
“We urge employers to do everything they can to avoid making redundancies, but where this is unavoidable, it is important that employees receive the payments they are rightly entitled to,” business secretary Alok Sharma said in a statement.
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While originally planned to end earlier in the year, the CJRS will only be fully phased out by the end of October. During that month, the government will pay 60% of employees’ wages, with employers making up 20%.
Chancellor Rishi Sunak has repeatedly ruled out a further extension to the CJRS, saying that it would be “wrong to keep people trapped” in a situation where they would have no job to return to.
According to the latest Halifax House Price Index, the average price of a UK home rose as high as £241,604 last month. July’s figure represents an increase of 1.6% from June, and an increase of 3.8% year-on-year.
The new figures – which represent the highest house prices ever recorded by the Index in its 37-year history – also support the recent findings of the Nationwide Building Society, which saw house prices climb by 1.7% during July.
Halifax managing director Russell Galley hailed the results as a positive sign for the housing market. “Following four months of decline, average house prices in July experienced their greatest month on month increase this year, up 1.6% from June and comfortably offsetting losses in 2020,” he said. “The latest data adds to the emerging view that the market is experiencing a surprising spike post lockdown.”
Galley attributed this price spike to pent-up demand from months spent under lockdown suddenly being released into the market, coupled with an ongoing lack of available houses to meet the surge in demand.
However, Galley also emphasised that the uncertainty regarding the effects of the COVID-19 pandemic and the government’s response would continue to play a role in the sector: “As government support measures come to an end, the resulting impact on the macroeconomic environment, and in turn the housing market, will start to become more apparent.”
Anna Clare Harper, the author of Strategic Property Review, echoed Galley’s opinion. "What we can't forecast is what happens next: economically, and in policy. What we can predict accurately is that these two factors will prove fundamental to the future of the UK housing market," she said.
Xero’s analysis revealed a 26% decrease in small and medium-sized enterprises (SMEs) during the month of April, and a 28% increase during May, compared with figures from the previous year.
It also found that invoices are taking longer to be paid, with the average waiting time for SMEs rising from 30.7 days to 38.5 days since February – an increase of a little over a week.
The platform also identified a decrease in small businesses’ employment rates. In an analysis of payroll data, it emerged that small business employment fell by 6% between May and March despite the influence of the government’s coronavirus job retention scheme, which is set to be scaled back in the coming months.
Hardest hit were small businesses in the hospitality sector, which shed 11% of jobs in April and a further 3% in May. Revenue-wise, the sector saw an average decrease of around 57% in April and 53% in May. The next closest sector was arts and recreation, which saw losses of 41% for both months.
These findings form the basis of Xero’s Roadmap to Recovery manifesto, which calls on the government to provide extra support to help small businesses rebuild in the wake of the pandemic.
“The pandemic has had a devastating impact on business,” said Gary Turner, UK managing director of Xero. “As our customer data shows, jobs are being lost and the creation of new ones will depend on how quickly the economy can be rebooted.”
This AI ‘arms race’ is being driven by two tech superpowers: the United States and China. The US is barrelling ahead, with Washington recently signalling its intentions to promote AI as a national priority. Last year, President Donald Trump launched a national AI strategy – the American AI Initiative – which orders funds, programmes and data to be directed towards the research and commercialisation of the technology.
Government involvement and long-term investment in AI has paid off: US companies have raised more than half (56%) of global AI investment since 2015. China, meanwhile, is catching up quickly and is now vying with the US to become the dominant force in the area. In 2017, it laid out a roadmap to become the world leader in AI by the end of the decade – and create an industry worth 1 trillion yuan (or the equivalent of $147.7 billion). As part of the three-step strategy, China has announced billions in funding for innovative startups and has launched programmes to entice researchers.
Achieving economic and political prowess is the ultimate goal. Indeed, AI is a vast toolbox of capabilities which will give nations a competitive edge in almost every field. However, the question beckons: where does Europe stand in this race, and what is at stake? Nikolas Kairinos, founder and CEO of Soffos, offers his analysis to Finance Monthly.
Europe is falling behind
Thanks to great access to home-grown talent and an inspiring entrepreneurial spirit, Europe is still a strong contender in this race. According to McKinsey, Europe is home to approximately 25% of the world’s AI startups, largely in line with its size in the world economy. However, its early-stage investment in the technology is well behind that of its competitors, and over-regulation risks stifling further progress.
Thanks to great access to home-grown talent and an inspiring entrepreneurial spirit, Europe is still a strong contender in this race.
Early last year, for instance, the European Commission announced a pilot of ethical AI guidelines which offer a loose framework for the development and use of AI. The guidelines list seven key requirements that AI systems must meet in order to be trustworthy; amongst the chief considerations are transparency and accountability.
The intentions behind such proposals are pure, albeit counter-productive. Proposing a new set of standards to be followed risks burdening researchers with excessive red tape. After all, AI remains a vast ocean of uncharted waters, and introducing ever-changing hurdles will only impede progress in R&D. Innovative new solutions that have the capacity to change society for the better might never come to light if developers do not have the freedom to explore new technologies.
Meanwhile, a European Commission white paper recommends a risk-based approach to ensure regulatory intervention is proportionate. However, this would only serve to deter or delay investment if AI products and services fall under the loose definition of being too ‘high-risk’.
Upholding human rights through proper regulation is of paramount importance. However, Europe must be careful to find the right balance between protecting the rights of its citizens and the needs of technologists working to advance the field of AI.
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The risk of ignoring AI solutions
What is at stake if AI development falls behind? The risk of ignoring AI solutions is immense, particularly for sectors like the financial services industry which must keep pace with evolving consumer habits.
AI has given the world of banking and finance a brand new way of meeting the demands of customers who want better, safer, and more convenient ways to manage their money. And with populations confined to their homes for long periods of time in the face of the coronavirus pandemic, the demand for smart digital solutions that allow people to access, spend, save and invest their money has peaked.
Those who fail to adapt by leveraging AI are at risk of losing their competitive advantage. The real value of AI is its automation potential; AI solutions can power more efficient and informed decision-making, taking on the data processing responsibilities that would normally be left to humans. If used wisely, smarter underwriting decisions can be made by delegating the task of assessing loan and credit applications to AI. Not only is this markedly faster than performing manual checks, but the chances of making risky decisions will also be reduced: AI software can be used to build accurate predictive models to forecast which customers have a higher likelihood of default.
Accurate forecasting is needed to ensure the continuity and success of a business. Again, those businesses that utilise the AI toolsets at their disposal stand to benefit from advanced analytics. Machine learning – a subset of AI – is adept at gathering valuable data, determining trends, anticipating changing customer needs and identifying future risks. Those who turn their back on AI risk losing out on sound risk management, leaving their profits and reputation vulnerable.
Accurate forecasting is needed to ensure the continuity and success of a business.
At the heart of any bank or financial firm, however, lies the customer. Traditional bricks and mortar banking is no longer the favoured option when money can instead be managed online. Yet, while online banking is by no means a new phenomenon, AI offers the hyper-personalised services that customers seek. Indeed, a global study conducted by Accenture recently found that customers today “expect their data to be leveraged into personalised advice and benefits, and tailored to their life stage, financial goals and personal needs.” Meanwhile, 41% of people said they are very willing to use entirely computer-generated advice for banking.
There is clearly an appetite for innovation from the consumer side, and financial institutions must step up to enhance their offering. Enhanced, real-time customer insights generated by AI will optimise recommendations and tailor services to each individual. AI-powered virtual assistants that offer personalised advice and tools which can analyse customers’ spending to help them meet their financial goals are just some of the ways that financial institutions can create a better customer experience.
These are just a few of the many incredible applications of AI within the financial services sector. Not only can it enhance a business’ core proposition, but the cost-saving potential and operational efficiency is becoming difficult to ignore.
AI technologies are transformative, and those who fail to invest in new solutions risk losing out on the multitude of benefits on offer. I encourage business leaders to think carefully about the about the outcomes that they want to drive for their institution, and how AI can help them achieve their goals. I hold out hope that Europe as a whole will ramp up AI development in the coming years, and I hope to see governments, businesses and organisations working together to continue to push forward the AI frontier and pursue innovative applications of this technology.
Nikolas Kairinos is the chief executive officer and founder of Soffos, the world’s first AI-powered KnowledgeBot. He also founded Fountech.ai, a company which is driving innovation in the AI sector and helping consumers, businesses and governments understand how this technology is making the world a better place.
On Monday, HM Treasury named Nikhil Rathi, former chief executive of the London Stock Exchange, as the new head of the FCA.
Rathi will take over from interim chief executive Christopher Woolard, who entered the position after the last permanent CEO, Andrew Bailey, who led the regulator for over four years before stepping down in March to become governor of the Bank of England.
Chancellor Rishi Sunak said in a statement on the appointment: “Nikhil is the outstanding candidate for the position of chief executive of the Financial Conduct Authority, and I am delighted that he has agreed to take up the role.
“We have conducted a thorough, worldwide search for this crucial appointment and, through his wide-ranging experiences across financial services, I am confident that Nikhil will bring the ambitious vision and leadership this organisation demands.”
Rathi, who is ethnically British-Asian, will also be the first BAME head of the watchdog. He will be paid £455,000 a year with a 12% pension, though he will not be entitled to bonuses. His term will last for five years.
Commenting on his new appointment, Rathi said: “I am honoured to be appointed chief executive of the Financial Conduct Authority - I look forward to building on the strong legacy of Andrew Bailey and the exceptional leadership of Christopher Woolard and the FCA executive team during the crisis.
“In the years ahead, we will create together an even more diverse organisation, supporting the recovery with a special focus on vulnerable consumers, embracing new technology, playing our part in tackling climate change, enforcing high standards and ensuring the UK is a thought leader in international regulatory discussions.”
Many people have found that their personal finances are in a less healthy place as a result of the COVID-19 pandemic. So, it is natural to want to find a way to get your money back on track. Here we take a look at ways that you can stabilise your personal finances beyond COVID-19.
Don’t panic!
It can be natural to see the impact that COVID-19 has had on the economy – and, more specifically on your personal finances – and think that the right thing to do is to make drastic changes. Whether that means moving your investments or looking to sell property straight away, these sorts of changes can be tempting.
However, it is important to understand that many things will actually go on as normal. Once the markets are over the shock there has been the suggestion that dips in the economy will not be as bad as feared and the fall in house prices will not actually be too substantial – around 3% according to Knight Frank.
Consider equity release
Of course, it may be the case that, like many people, a large part of your finances is tied up in your property. This can be a very frustrating situation if you have a house that is worth a significant amount of money, but that you cannot access without selling it. Thankfully it is actually possible to get access to this money through equity release.
Equity release can be “a sensible and practical solution for financing your lifestyle, home improvements, education or general income”. It involves essentially taking out an amount of money from the value of a property, which is then paid back when you die.
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Make savings where you can
COVID-19 has left a world completely changed in its wake. For many people, this has caused a great deal of financial strain and challenges. However, it is important to note that there are also savings to be made that have arisen out of the situation.
For example, it may be the case that you are now able to work from home more often or perhaps that you no longer need to travel to work at all. If this is the case you may be able to actually save a significant amount of money. And there may be many different examples of this, where new circumstances have created a life that is cheaper for you.
Take advantage of government schemes
It is important to stay up to date with which government schemes are in operation. The UK government is well aware that this is an unprecedented crisis and that businesses and individuals need support in a way that would have been unheard of in the pre-COVID world. This will certainly be an evolving issue, and you will need to keep ahead of the game.
Of course, remember that the first port of call could be the government’s standard Universal Credit income support, which is always available. For anything else, it is wise to follow the government’s website.
Do not ignore payments
It is important to recognise that COVID-19 is not simply an opportunity to ignore your financial obligations. Whilst facing difficult financial circumstances is not something anyone wants to experience, it cannot be an option for you to ignore them and hope that they go away – they will not.
Do not delay making payments in the belief that you will have much more money in the future. If you do, then you can enjoy the benefit then, but for now, it is necessary to make the hard choices and keep up to date. This can help you avoid getting into further debt, incurring fines or damaging your credit rating.
Do not delay making payments in the belief that you will have much more money in the future.
Re-evaluate your budget
So, the solution, in this case, has to come from somewhere else – and this may have to involve re-examining your budget. As we have discussed above, COVID-19 has actually changed a great deal about the ways that we live and work, and it may be the case that you no longer need some of the more expensive aspects of your lifestyle.
Perhaps you and your partner have a car each, but it’s actually now extremely rare that you use both at the same time. This will vary from person to person, but it may be the case that you can save a significant amount of money simply by assessing exactly what you need to be spending money on.
The tapering down of different initiatives will spark fresh concerns within many organisations, raising questions of whether they will be able to stand on their own two feet again.
The furlough scheme is at the heart of this subject. That is because it has been the most widely-used of all the financial support schemes available – around 8.4 million workers are having 80% of their salaries paid for by the Government at present (up to £2,500 a month). But at the end of May, the Chancellor Rishi Sunak confirmed that the furlough scheme is to end on 31 October 2020, and it will undergo some changes before then.
There are two key questions, then, that business leaders must address. Firstly, what do they need to know about the upcoming reforms to the furlough scheme? Secondly, what can they do if the curtailing of this initiative is likely to cause significant financial distress? Nic Redfern, Finance Director at KnowYourMoney.co.uk, offers his thoughts to Finance Monthly.
What are the changes to the furlough scheme?
Currently, it is estimated that the Government has spent £15 billion so far in covering the salaries of furloughed staff. By the end of the scheme, that figure is likely to reach £80 billion – that is £10 billion for each month the scheme was running.
While the Office for Budget Responsibility is set to publish more detailed costings in the coming days, what these approximated figures show us is that there are billions of pounds that is still yet to be paid for the initial four months of the furlough scheme.
This chimes with the findings of a recent study that KnowYourMoney.co.uk conducted among over 900 UK businesses. We found that as of April almost half (48%) of British companies had furloughed staff – this figure will likely be even higher now – but of those, 71% were still awaiting funds to be transferred to them from the Government.
Currently, it is estimated that the Government has spent £15 billion so far in covering the salaries of furloughed staff.
The Government must prioritise getting up to date with furlough payments to employers; businesses with many members of staff on furlough will not only be feeling the strain if they are not being reimbursed for their salaries, but they will also struggle to understand the real financial health of the business when some supports are yet to be issued.
Employers must do all they can to clearly track how much of their expenditure on salaries is likely to come back into the business. But they can only do so if they understand how the scheme is due to change in the months ahead.
Here are the key changes that were announced by the Chancellor on 29 May: from Wednesday 1 July, businesses using the Government's furlough scheme will be able to bring furloughed employees back part-time; from August, employers will have to pay national insurance and pension contributions; and from September, while employees on furlough will continue to get 80% of their salary, the proportion that the state pays will be reduced each month (government will only pay 70% in September and 60% in October).
The part-time furlough option may interest some employers. Let’s take a simplified example: a member of staff who earns £2,000 per month and works 40 hours a week, but has been furloughed and their employer is not topping up their salary beyond the 80% offered by the Government. If said member of staff returns part-time and work 20 hours per week throughout July, they will now receive 50% of their monthly salary from their employer as normal (£1,000). Meanwhile, the remaining 50% will be paid via the furlough scheme (80% of it – so £800). That means they employee will now earn £1,800 per month, which is higher than the amount they would be paid if they were furloughed full-time (£1,600).
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This solution could suit both employers and employees. Not only can it bolster the workforce and aid the transition back into work for some people who have been furloughed for many weeks, but financially it would ensure the part-time employees are better off. Plus, the business does not need to suddenly jump back to paying all of their salaries.
What are the alternatives?
For some businesses, though, they might not be in a position to bring furloughed staff back, even on a part-time basis. Yet they will need to do so once November arrives. So, what can they do to put themselves in a stronger financial position as they prepare to pay all of the employees’ full salaries again?
The important thing to remember is that there remain many options available for businesses requiring financial support.
For one, the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce-Back Loans initiatives are both still operational. Elsewhere, the Government is providing a Small Business Grant Fund (SBGF) to businesses that already receive Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR).
Furthermore, it is worth remembering that any VAT payments due between 20 March and 30 June 2020 can be deferred to a later date. Also, any Income Tax Self-Assessment payments that are due by 31 July 2020 can be deferred until 31 January 2021.
The viability of these options will very much depend on each business’ circumstances. But importantly, if the tapering down – and eventual ending – of the furlough scheme is causing financial concerns within your organisation, remember that there are other forms of support in place.
This figure marks the Bounce Back programme as easily the most popular form of COVID-19 support offered to SMEs by the UK government, more than doubling the combined total lent under HMT’s two other support programmes.
Launched last month following complaints that the government’s coronavirus business interruption loans (CBILS) were being issued too slowly, the Bounce Back loans application process features only minimal background checks against money laundering and fraud in order to ensure a faster process. Unlike CBILs, which are only 80% guaranteed by the state, Bounce Back loans are backed 100%.
However, the light restrictions of the scheme have come under criticism by some as insufficient to prevent loans from going bad. Senior bankers interviewed by the Financial Times estimated that between 40% and 50% of those receiving the loans may default on the debt.
As these loans are entirely guaranteed by the state, a surge of defaults would mean UK taxpayers footing the bill.
Stephen Jones, head of UK Finance and former CFO of Santander, said: “It’s important to remember that any lending provided under government-backed schemes is a debt not a grant, and so firms should carefully consider their ability to repay before applying.”
Tuesday’s figures also revealed that 700,000 out of the 870,000 applicants to the Bounce Back scheme have been granted loans. A further 45,000 businesses have borrowed a cumulative £8.9 billion under the CBIL scheme, and 191 companies have borrowed a cumulative £1.1bn under the coronavirus large business interruption loan scheme.
Chancellor Rishi Sunak is preparing to scale back the UK government’s coronavirus furloughing scheme as lockdown measures are eased, according to several sources.
The Times has reported that the chancellor will announce plans next week to “wind down the scheme from July” in a bid to boost the economy, reflecting a growing attitude in government that recipients are in danger of becoming used to the aid it provides.
In an interview with BBC One on the future of the furloughing scheme, former Treasury minister David Gauke expressed worry that those workers currently furloughed might end up growing accustomed to their current circumstances.
“I don’t think anybody is addicted yet but if over time we end up paying people for staying at home, that’s what they’ll do,” he said.
The Coronavirus Job Retention Scheme has seen significant use, with almost a quarter of UK employees having been furloughed in the past fortnight alone. The chancellor will likely announce details of any plans to scale it back by mid-May, due to regulations mandating that employers making more than 100 staff redundant must run a 45-day consultation before the job cuts are made. As the furlough scheme is slated to end in June, this will force companies to consider their options as early as next week.
Possible ways the government might choose to scale back the scheme include reducing the wage subsidy to a level lower than 80%, or reducing the £2,500 cap on monthly payments.
Prime Minister Boris Johnson is expected to outline further plans to roll lockdown measures back this Sunday.
US
In the US, all 50 states have declared emergencies with governments at the local, state and federal level taking action to ease the financial burden on Americans. Trump’s administration and Congress agreed on a $2 trillion stimulus package, which includes income support of $1,200 per adult and $500 per child and starts phasing out for individuals who earn $75,000 per annum or $150,000 for couples. Loans worth $367 billion have been offered to small businesses struggling with the immediate drop in revenue due to the pandemic. The government will not expect the businesses to pay the money back if they manage to retain most of their employees over the next six months.
In the form of loans, loan guarantees and purchases of companies’ corporate debt, the legislation provides a total of $454 billion which will help large and medium-sized business access capital during the crisis. $58 billion have been set aside to help American airlines through loans and grants and $17 billion will be provided to help companies that are critical to maintaining national security.
UK
In March, UK Chancellor Rishi Sunak announced a £350 billion emergency package for the economy[1] which consists of state loan guarantees worth £330 billion along with a further £20 billion of handouts for struggling businesses. He also promised £12 billion in emergency support in the budget, a one-year abolition of property taxes for all companies in affected sectors and suspended business rates for many firms.
The Chancellor also added a generous £9 billion scheme to support up to 3.8 million self-employed workers hit by the impact of the pandemic. 95% of the country’s self-employed people are able to access a grant of 80% of their recent average profit (capped at £2,500).
The government also announced a job retention scheme which offers compensation in full for employment costs of up to 80% of salary bills for workers that companies can’t provide work for, but are kept on payroll.
Germany
The German finance and economic ministers have vowed to make unlimited financing available to individuals and businesses as part of the country’s efforts to immunise Europe’s largest economy from the COVID-19 impact. The government promised that there will be no upper limit on the aid that will be offered to companies that are affected by the crisis.
The government has set aside a “supplementary” €156 billion budget for 2020[2], which includes a €50 billion plan to provide direct grants to small businesses and self-employed people who can’t access bank credit. Businesses with up to five employees are eligible for a one-off grant of €9,000 for three months, whilst those with up to ten employees will receive €15,000.
The government has also set up a €500 billion bailout fund to recapitalise big companies with more than 250 employees that face struggles due to the crisis. Landlords are also not allowed to evict tenants who fail to pay their rent due to the pandemic.
The country’s also expanding its programme of export credits and other additional guarantees to help struggling companies and has committed to deterring “billions of euros” in tax payments. Germany is also compensating individuals who are sent home by their employers due to the lack of work for them. The government anticipates that the scheme will cost the Federal Labour Office €10.05 billion.
France
Like many of his colleagues from across the globe, French President Emmanuel Macron has guaranteed that the French Government will offer unlimited support for individuals and companies that have been affected by the global pandemic, which will cost the country €45 billion. He’s also committed to offering grants to workers who have found themselves in unemployment due to the pandemic crisis. France’s Minister of the Economy and Finance has also promised €300 billion of French state guarantees for bank loans to companies, as well as €1 trillion of such guarantees from European institutions.
The government has also suggested the possible rescue of companies such as Air France, which have state shareholdings, and has deferred company tax and social security payments. It’s also offered sick leave payments to parents who have to stay at home to take care of their children due to school closures.
Economists have warned that the damage from the coronavirus crisis could be similar to that from the 2008 recession.
Italy
Italy has begun distributing funds from the fiscal rescue package, totalling up to €25 billion, promising that “nobody will be left alone”. €1.15 billion of this has been distributed to their health system and €1.5 billion has been offered to the civil protection agency, which has been working on Italy’s coronavirus response.
Additionally, self-employed people have been promised one-off payments of €500 per person, companies that pay redundancy payments to their employees have been offered support, there’s been a freeze on any worker lay-offs, and people who are still working during this time have been offered bonuses.
Businesses hit by the pandemic have been promised loan guarantees and a moratorium on loan and mortgage payments is expected to be put in place. Financial support will be offered to families with children, as well as taxi drivers and postal workers who have to continue working during lockdown. The government also announced plans to financially support Italian airline Alitalia.
Spain
Spanish Prime Minister Pedro Sánchez has described the government’s coronavirus rescue package as the “biggest mobilisation of resources in Spain’s democratic history”. It includes €100 billion of state loan guarantees for companies aimed at ensuring liquidity, specifically for small and medium-sized companies. The whole package will amount to €200 billion.
Mr Sánchez has also announced a moratorium on mortgage payments for people who have been hit hard by the pandemic and a similar moratorium for utility bills. He’s also suspended some social security payments and has set aside €600 million to help people who depend on social services.
[1] https://news.sky.com/story/coronavirus-330bn-of-government-backed-loans-for-businesses-11959156
[2] https://www.ft.com/content/26af5520-6793-11ea-800d-da70cff6e4d3
