COVID-19 Political and Economic Fallouts – Paving the Path for Recovery
Europe is a colourful continent in terms of policies and outcomes. It is essential to stay updated on how these policies may impact your work to build better regulatory frameworks, enhance your message and enhance communication with stakeholders.
Here you can find a summary of the major European political updates of this week.
As one of the hardest hit countries by Covid-19, the total death toll in Italy surpassed 10.000 on 28 March. However, the number of fatalities seems to be gradually slowing in the recent days. The Minister of Health Roberto Speranza announced on 1 April that the country’s lockdown will be extended until 13 April. Several countries have supported Italy with personal and medical equipment, and most recently Albania sent 30 doctors and nurses. Nonetheless, this has caused severe economic consequences that must be dealt with. The Italian Government has recently also designated €400 million for food vouchers and an emergency food relief fund. After an initial allocation of €20.9 million, the Bank of Italy (the central bank of Italy and part of the European System of Central Bank) on 31 March approved new donations equal to over €34 million to hospitals to help combat the COVID-19 emergency. In addition, the same Bank will give 9 billion to the State to help the economy heavily affected by the crisis. At the EU level, the Italian government has called for increased coordination between Member States to deal with the economic impacts. They have argued for a joint debt to be be issued, named Coronabonds, to cover some of the debt incurred because of the virus. So far, the German and Dutch governments have expressed reticence at the use of Eurobonds. In a press conference on 29 March, the Prime Minister Conte warned that “if Europe does not rise to this unprecedented challenge” European cooperation might lose its meaning and raison d’être for people.
On 31 March, Federal Minister of Labour Hubertus Heil and the Chairman of the Federal Employment Agency Detlef Scheele made an initial assessment of the impact of the COVID-19 pandemic on the German labour market. They elaborated the increase of short-time working as the Federal Agency of Employment received 470,000 applications for short-time work. Minister Hubertus Heil committed to securing as many jobs as possible but nevertheless emphasised that the COVID-19 pandemic would have bigger consequences than the 2008 financial crisis. Although the Federal Ministry of Labour and the Federal Agency of Employment have financial reserves, Hubertus Heil explained that it is ambitious to secure all the jobs currently being lost. The Federal Ministry of Health launched a website on which certified nursing staff can signal their willingness to work in healthcare facilities. The Ministry cooperates with various public health actors such as the German Nursing Council. Additionally, another platform was introduced called "Deutschland zusammen" (Germany together) that aims to support people in need for help with daily life.
In the beginning of March, eight EU countries including Germany explained their willingness to take 1500 refugee children as well as parents with small children from refugee camps on the Greek islands. Since then, nothing happened. Federal Minister of Interior, Horst Seehofer, explained that the European Union is responsible for the coordination of the rescue. However, the current COVID-19 pandemic would complicate the situation. To date, the first case of COVID-19 in Greek refugee camps was reported. Given the terrible hygienic conditions in the camps, a rapid spread of the virus is more than likely.
Regarding Covid-19, there are over 500 cases and over 20 deaths in Hungary with a democratic and economic fall out as a result. The Hungarian government passed a law on 30 March allowing the government to have special powers, with no time limit or end date foreseen. The Fidesz party has supreme majority in the parliament, and this law was practically unilateral and has been largely criticised as a threat to democratic values. The government justifies as not knowing the exact end date to the crisis but will return the powers to the Parliament and State once the crisis is over.
The government is also planning to pass a new law to strip municipal powers. A municipal election in October saw a decrease of Fidesz numbers, and this measure therefore would transfer all decision-making powers and has also raised concerns.
In economic terms, the Hungarian BMI has not been this low since 1995, which shows the extent of the economic impact.
The government is adapting stricter containment measures for COVID-19 in Spain due to high numbers of infected people, over 100,000 cases. As such, the Council of Ministers passed a new decree aiming at minimising travels and gatherings for non-essential workers during the Easter break. Non-essential workers not being able to perform their job remotely will be under a recoverable paid leave scheme, allowing them to make up for non-worked hours throughout 2020. Although their activities will stop from 30 March until 9 April, their leave will still be paid as usual.
Another decree was approved by the Council of Ministers for a 3rd package of over 50 economic and social measures within the COVID19 contingency plan aimed at tenants, household assistants and self-employed workers, amongst others. The decree will have to seek approval of other political forces in the Spanish Congress. Measures include support to workers, families, consumers, self-employed workers and vulnerable individuals to mitigate economic loss and reduce their fixed costs to ensure a minimum income. The proposal includes a moratorium period for economically vulnerable tenants, suspension of evictions for the next 6 months, mortgage moratorium for 3 months, support to basic supplies in households, and prohibition to companies to cut off electric, gas and water supplies. It also includes support to productive activities and employment stimulus to allow a better economic recovery. Some of the measures included in the state of emergency decree have been reinforced and extended an additional month after the end of the state of emergency.
Portugal has been in State of Emergency since 22 March due to COVID-19. On 1 April a meeting of the Council of Ministers took place, and the President of the Republic Marcelo Rebelo de Sousa announced extension of the period of State of Emergency until 17 April. The latest count in the country is over 7,000 cases. On 2 April the Parliament will meet and discuss 64 proposals to deal with the covid-19 pandemic. Notable proposals discussed include suspension of expiration of housing and non-housing lease agreements until 30 June. The Portuguese government has asked the European Commission to approve new credit lines worth €7 billion to support companies. The Portuguese central bank has also once more waived the need for banks to build up counter-cyclical reserves in the second quarter of this year.
Regarding the national economy, the State Budget 2020 will enter into effect on 1 April, as well the Grand options of the Plan 2020 (GOP), and the Multiannual Financial Plan for 2020-2023. Nonetheless, President Marcelo de Sousa declares that he is aware that the context of implementation of these strategies has largely changed. In view of this, he announced that the economic and social effects as a result of the pandemic may force this plan to be adapted. Notable measures include abolishment of user taxes in primary healthcare, as well as exemption of these fees of the complementary exams of diagnosis and therapy to primary care, carried out in public health services as of 1 September, and extended to all complementary diagnostic and therapeutic tests from 2021.
You can find more information on European news in our EU national elections heatmap, where we provide an overarching perspective with key political insight for individual countries. Make sure to check it here.