Europe - Coronavirus latest

EUROPE

Population size: 340 million

Number of SMEs: 17.6 million

On July 21, EU leaders agreed a €750bn ($859bn) post-coronavirus recovery package. It involves grants and loans to counter the impact of the pandemic in the 27-member bloc. The deal centres on a €390bn programme of grants to member states hardest hit by the pandemic. Italy and Spain are expected to be the main recipients.

A further €360bn in low-interest loans will be available to members of the bloc.

The package will allow members to maintain spending in the aftermath of lockdowns that badly affected public finances.

On December 10, the European Central Bank pledged to buy €500bn additional bonds (the central bank pledged to buy €600bn extra bonds in June). The move increased the size of its pandemic emergency purchase programme (PEPP) from €1.35tn to €1.85tn and pushed back the end of its main crisis-fighting tool from next June until at least March 2022, while reinvesting the proceeds of maturing securities until at least the end of 2023.

On April 23, EU governments agreed an additional €540bn of financial support. European Commission chief Ursula von der Leyen said the fund would mobilise €1000bn of investment.

It follows a €540bn rescue package for countries hit hardest by the pandemic on April 10. The main component of that rescue plan involves the European Stability Mechanism, the EU's bailout fund, which makes €240bn available to guarantee spending by indebted countries under pressure.

EU ministers also agreed other measures, including €200bn in guarantees from the European Investment Bank.

Other measures include re-directing €1bn from the EU Budget as a guarantee to the European Investment Fund to incentivise banks to provide liquidity to small and medium-sized enterprises (SMEs) and midcaps.

The European Commission also activated the general escape clause in EU fiscal rules, which allows countries to run deficits in excess of 3% of GDP.

Lending volume and rates under the Targeted Longer-term Refinancing Operations (TLTRO) III eased (25 bps cut) to support SMEs and households.

The Pandemic Emergency Purchase Programme agreed on March 19 sets aside €750bn until the end of the year, in addition to the €120bn asset purchase programme decided on 12 March.

On April 30, the ECB expanded its programme of loans to banks, offering to lend money to banks at rates as low as minus 1%.

The ECB also said a new series of non-targeted pandemic emergency longer-term refinancing operations (PELTROs) would be launched and last until next year to provide “an effective liquidity backstop”. The new PELTROs will allow banks to borrow at minus 0.25%, in effect paying them to borrow money.

Country Population size Number of SMEs Measures
united-kingdom
UK
66 million 5.9 million

On July 8, Chancellor Rishi Sunak unveiled another £30bn ($37.6bn) coronavirus stimulus package, including tax breaks, restaurant discounts and jobs programmes.

The announcement brings the government’s stimulus commitments to about £166bn ($208bn), or 7.4% of 2019 GDP.

The move follows a £1.57bn support package announced on July 5 to help protect UK theatres, galleries, museums and other cultural venues.

The Coronavirus Business Loans Interruption Scheme passed in mid-March makes £336bn of loans and guarantees available to businesses.

In addition, £6.7bn and £85bn has been set aside for health care, sick leave and small business loans.

On April 20, the UK government put forward a £1.25bn ($1.55bn) package to support SMEs, with a focus on research and development. The package includes a £500m investment fund for high-growth companies impacted by the crisis and £750m in grants and loans.

On May 21, the UK government pledged £50m on digital and technology systems as part of its response to the outbreak.

The Bank of England cut interest rates by 65bps to 0.1% in March and increased its holdings of UK government and corporate bonds by £200bn.

On June 18, the central bank boosted its bond-buying programme by an additional £100bn.

germany

Germany

83 million 2.5 million

On June 3, Germany's coalition government agreed a €130bn fiscal stimulus package. As part of the package, VAT will be cut from 19% to 16% from July to December and familes will recieve a transfer of €300 per child. Other measures include new incentives for buying electric cars.

The package comes on top of a €1100bn relief package (30% of GDP) agreed on March 27 which required the removal of the legally-binding debt ceiling and comprised loan guarantees, subsidies and a shorter-hours programme to avoid job cuts.

The government adopted a supplementary budget of €156bn which includes spending on healthcare equipment, hospital capacity and R&D expanded access to short-term work subsidy to preserve jobs and workers’ incomes.

The government is expanding the volume and access to public loan guarantees for firms of different sizes, increasing the total volume by at least €757bn. 

In addition to measures at the euro area level, release of the countercyclical capital buffer for banks from 0.25% to zero and an additional €100bn to refinance expanded short-term liquidity provision to companies through the public development bank KfW, in partnership with commercial banks.

KfW has been authorised to lend €882bn to firms, including those which had not been eligible for loans before. 

austria

Austria

8.8 million 339,000

The total fiscal package amounts to €38bn, which is about 9% of GDP. 

A crisis management fund was initially endowed with €4bn on March 15 to address liquidity pressures from additional claims on the healthcare system, fund short-time work, and compensate self-employed and small businesses.

A €2bn euro guarantee scheme for exporting companies was established under the existing limits for export credits. An additional €34bn, of which up to €15bn targets companies in the export sector, €7bn for more generalised credit guarantees and €10bn for deferral of personal and corporate income tax payments for 2020. 

On March 22, €22m was earmarked for research and short-term work until May with the possibility to extend it by another three months. Under this provision working hours may be reduced to up to 10%, at 80-90% of regular pay.

belgium

Belgium

11.4 million 604,000

The government announced a fiscal package of €8bn-€10bn and €50bn of guarantees for new bank loans to companies and self-employed totalling about 10-12% of GDP.

Regional governments have also announced additional subsidies to affected firms and sectors and further bank-loan guarantees.

Other measures taken by the Belgian authorities include reducing the counter-cyclical bank capital buffer to 0% and postponement of debt repayment due to banks by affected households and companies to September 30.

france

France

67 million 3 million

On September 3, France unveiled a €100bn economic stimulus package to help repair the economic damage caused by coronavirus. The investment will include big spending on green energy and transport.

The move follows the government increasing spending to €100bn on April 9. In March, it announced a €45bn aid package that included €8.5bn for two months of payments to workers temporarily laid off and €2bn for SME support. 

Other measures include a €300bn fiscal support package for bank loans.  Companies that continue paying shareholder dividends will not be able to benefit from this. 

Government will allow companies to delay paying taxes (€32bn), and will provide support to delay loan payments. There is also a six-month moratorium on corporate loan repayment and deferral of utility fees for companies with less than €1m in revenue.

greece

Greece

10.7 million 821,000 The government has announced a €15bn package of measures totalling 7.5% of GDP including liquidity support to hard hit businesses.
hungary

Hungary

9.7 million 581,000

About 80,000 SMEs will be exempt from the small business tax and about HUF25bn ($76m) has been reallocated for the healthcare sector.

On April 8, an additional package of new measures was announced, supported by the creation of two new funds, focused on job protection, notably by subsidising wages to companies on workers who were put on shortened work hours and job creation by supporting investments worth a total of HUF450bn.

On April 7, the central bank announced a change in the overnight lending rate by 95 bps to 1.85% and it will provide unlimited long-term liquidity to banks at fixed interest rates through a collateralised lending facility with maturities of three-, six- and 12-months and three- and five-years.

ireland

Ireland

4.9 million  263,000

The Irish authorities have a fiscal package of €7.2bn (about 2% of GDP) including income support measures. The Covid-19 Wage Subsidy scheme refunds employers up to 70% percent of an employee's wages – up to a level of €410 to allow employers to pay their employees during the pandemic.

Liquidity support for affected businesses includes an initial package of €200m.

Additional measures announced by the Central Bank of Ireland (CBI) include the release of the countercyclical capital buffer, which will be reduced 1% to 0%. SMEs will have the possibility to defer loan payments up to three months.

italy

Italy

60.3 million 3.7 million

The government adopted a €25bn emergency package on March 19. It includes funds to strengthen the Italian health care system and civil protection as well as measures to preserve jobs and support income of laid-off workers and self-employed.

Other measures to support businesses, including tax deferrals and postponement of utility bill payments in most affected municipalities as well as measures to support credit supply that seeks to unlock about €350bn of liquidity for businesses and households. 

Key measures adopted in the government’s emergency package include a moratorium on loan repayments for some households and SMEs, including on mortgages and overdrafts.

The Bank of Italy has announced a series of measures to help banks and non-bank intermediaries under its supervision including the possibility to temporarily operate below selected capital and liquidity requirements.

spain

Spain

47 million 2.7 million

On July 2, Spain approved a package of measures worth about €50bn intended to boost companies’ investment capacity and solvency to help revive the country’s economy.

A €18.2bn fiscal package had previously been approved to support healthcare, households, SMEs and sectors most affected by Covid-19. 

Further measures include exemptions of social contributions by impacted companies and tax payment deferrals for SMEs and the self-employed for six months (€14bn).

In addition, the government has extended up to €100bn government loan guarantees for firms and self-employed and up to €2bn public guarantees for exporters through the Spanish Export Insurance Credit Company. 

portugal

Portugal

 10.2 million 888,000

Key fiscal measures include €1bn per month in financial support for furloughed employees and €3.7bn of state-guaranteed credit lines for SMEs and micro-enterprises in affected sectors, operated through the banking system.

The Portuguese government has approved a six-month moratorium on bank loan repayments for families and companies affected by the coronavirus outbreak. 

The Banco de Portugal has also relaxed some aspects of its macro-prudential measures for consumer credit. 

malta

Malta

493,000 32,000 On March 18, the government announced a €1.8bn package and will provide loan guarantees up to €900m.
flag
The Netherlands
17.2 million 1.1 million

A package of fiscal measures has been announced that includes spending measures of about €10bn-€20bn over the next three months, and covering compensation of up to 90% of labour costs for companies expecting a reduction in revenues of 20% or more as well as compensation for affected sectors. 

In addition, companies can defer tax payments without penalties, and calculate provisional taxes on the basis of expected reduced activity levels. Also, public guarantee schemes, especially for SME loans, are expanded to help the most vulnerable companies to manage their liquidity problems. 

The Dutch central bank has reduced systemic buffer requirements for the three largest banks to support bank lending. The largest Dutch banks have agreed to grant SMEs a six-month postponement of their loan repayments.

denmark

Denmark

5.8 million 227,000

Fiscal support of about DKK60bn ($8.73bn) - about 2.6% GDP - to finance additional health care needs and extraordinary budgetary measures to support workers and businesses. 

The Danmarks Nationalbank increased the policy rate by 15bps to -0.6% on March 19 in a bid to ease pressure on Danish krone which is pegged to the euro. 

romania

Romania

19.4 million 485,000 Key tax and spending measures announced so far amount to 2% of GDP. In addition, the government is providing an initial 10bn lei ($2.24bn) of loan guarantees to SMEs.  The monetary policy rate has been reduced by 0.50 ppt to 2.0%.
slovenia

Slovenia

2 million 146,000

On March 24, the authorities announced a new additional economic stimulus package of €2bn, which includes loan guarantees for companies. 

Key monetary measures allow affected firms and individuals to obtain deferrals of bank loan repayments for up to 12 months.

As part of a €1bn economic stimulus announced on March 9, the authorities have approved some tax and spending measures.

In addition, €600m in government guarantees and credit lines offer financial support to the affected businesses, particularly SMEs.

sweden

Sweden

10.2 million 739,000

Fiscal package amounts to SEK380bn-668bn ($38.4bn-$67.5bn) depending on uptake. Key monetary measures include reduction of the lending rate for overnight loans by 55 bps to 0.2%.

Lending of up to SEK500bn to companies via banks has been made available and a lending facility has been introduced that allows banks with adequate collateral to borrow unlimited amounts with three-month maturity.

poland
Poland
37.9 million 1.7 million

New budgetary spending estimated at PLN66bn ($15.7bn) and proposed credit guarantees and micro loans for entrepreneurs estimated at PLN75bn have been approved.

On April 8, the government proposed an additional PLN100bn liquidity programme for micro, small/medium, and large enterprises, to be financed by the Polish Development Fund. 

The National Bank of Poland (NBP) reduced its policy interest rate by 50 bps to 1% on March 17 and cut interest rates by further 50 bps on April 8.

luxembourg
Luxembourg
613,000 34,000 The government’s fiscal package includes spending measures (€1.45bn) and liquidity support for eligible business and self-employed (€7.3bn).
lithuania
Lithuania
2.7 million 197,000

The government has announced an overall fiscal package of €2.5bn (5% of GDP). In addition, the government expanded guarantee schemes by around €1.3bn and increased the borrowing limit by €5bn.

In addition to policies from the ECB, the Bank of Lithuania has lowered its countercyclical capital buffer from 1 to 0%.

latvia
Latvia
1.9 million 114,000

The government announced a support package of about €2bn (6% of GDP) to support businesses and employees, including through tax holidays, sick pay leave and loan guarantees.

The measures aim to relieve sectors suffering losses as a result of the coronavirus crisis by covering 75% of employees’ wages from the state budget with the maximum monthly payment per employee set at €700. 

Other national measures include a 50% cut in interest rates on loans for SMEs in the tourism sector and a 15% cut for large enterprises.

cyprus
Cyprus
875,000 55,000

A support package of €422m (2-3% of GDP) for the health sector, households and businesses was approved by parliament on March 27. 

In addition to ECB measures, the Central Bank of Cyprus (CBC) announced on March 18 it would release capital and liquidity buffers for banks supervised by the CBC (€100m). 

finland
Finland
5.5 million 228,00

Government measures total about 2.3% of GDP and include €650m grants to SMEs and self-employed and expanded parental allowance, social assistance and unemployment insurance (€3bn). 

Bank of Finland to support liquidity through investing in short-term Finnish corporate commercial paper (€1bn) as well as 1ppt reduction in the structural buffer requirements of all credit institutions.

czech-republic
Czech Republic
10.6 million 1 million

The government announced a fiscal package of CZK100bn ($4bn) package (2% of GDP). The measures will include income support of 60% of gross wages of employees sent into quarantine and 100% (of which the state will cover 80%) of employees of businesses that had to close because of containment requirements. 

The government further granted a credit line for businesses through the state development bank CMZRB of CZK10bn and further pledged CZK900bn (16% of GDP) in guarantees.

The Czech National Bank (CNB) lowered the policy rate by 50bps on March 16 and another 75bps to 1% on March 26.

countries

Russia

144 million 4.5 million

On June 2, prime minister Mikhail Mishustin said Russia’s stimulus programme to help the economy recover from the crisis would cost about RUB5,000bn ($72.75bn) over the next two years.

The Russian government had previously outlined two economic support packages totalling RUB3,100bn ($42.1bn).

On March 20, Russia announced a RUB300bn ($4bn) fund to try to protect its economy from the fallout from the outbreak. Key measures include interest rate subsidies for SMEs and key enterprises and tax deferrals for the most affected companies. 

On April 24, the Central Bank of Russia cut the policy rate by 50bps to 5.5%. The CBR has also introduced temporary regulatory easing for banks intended to help corporate borrowers, and introduced a RUB500bn facility for SME lending.

Sources: International Monetary Fund, Institute of International Finance, official data, news sources

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