First steps to economic recovery taken by national governments
Europe slowly returns to a new normal, with changing health, political and economic priorities
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.
The UK Government has this week focussed on mitigating the economic impact of COVID-19 after the UK economy contracted by a record 20.4 percent in April. The Government this week reopened all non-essential shops and encouraged people to return to work where possible; almost 9 million people are having their wages paid through the Government, and Prime Minister Boris Johnson has prioritised reopening the economy to prevent a wave of redundancies as the Government eases its financial support measures. Johnson performed a U turn on his plan to suspend the free school meal scheme through summer after a campaign led by England football player Marcus Rashford, and Rashford and the Opposition have urged the Government to address rising pandemic poverty as 600,000 people were made redundant between March and May.
The French Parliament was convened by the President of the Republic and the Prime Minister in extraordinary session from 1 July, the day after the end of the ordinary session, to consider bills and proposals that were delayed due to lockdown measures. This includes bills on health, social debt, autonomy, and bioethics. The bill on social debt is particularly awaited because it provides an additional allocation of at least one billion euros for the care the elderly in 2021. On the institutional level, the highly centralised management of the sanitary crisis was criticised by regional authorities, particularly in view of the lack of autonomy in hospitals. Emmanuel Macron therefore announced a new division of competences between the State and local authorities, for which details will be provided in mid-July. Finally, the occupational health reform, which has been in the pipeline for more than two and a half years, resumed on Monday and could result in a legislative proposal before the end of the year. The government intends to improve a system that it considers difficult to understand, insufficiently focused on prevention and difficult to access for small companies.
On the coronavirus front, on 13 June the Federal Ministry of Health in Berlin announced that Germany, France, Italy and the Netherlands have signed an initial contract for 300 million doses of a coronavirus vaccine, which could be developed by the end of the year in the best case. Also, on 16 June the German government launched the Corona warning app. As more people use the Corona Warning App, chains of infection can be broken faster. Regarding travelling, consumers in Germany are still waiting to get reimbursed for trips they could not attend to due to the Corona crisis. According to the German Travel Association (DRV), consumers are yet to receive air ticket reimbursement of around four billion euros. In the financial sector, on 17 June the Federal Cabinet intends to adopt the second supplementary budget for 2020 at noon. The planned amount is 62.5 billion euros. According to the Taxpayers Association, the Minister of Finance is incurring more debt than necessary.
On 16 June, the Council of Ministers approved a royal decree creating a EUR 16 billion COVID-19 fund to tackle the negative economic impact of the virus, namely for the healthcare system, education and other essential public services. For the healthcare package, the fund will be transferred to the regions as follows: EUR 9 billion will be allocated to healthcare expenditure, of which EUR 6 billion will be received in July and another EUR 3 billion in November. Also, President Pedro Sánchez announced Spain will be reopening external borders to allow tourists coming from Schengen and EU countries in. Visitors will not have to undergo a compulsory quarantine, except for those coming from the UK. Although Spain will welcome tourists as of 21 June when the state of emergency expires, the Balearic Islands have started a pilot programme to receive tourists coming from Germany from 15 June. This has been put in place mainly due to the islands’ strong dependence on foreign tourism.
On 17 June, the national Parliament debated and voted on the government’s proposal for the Supplementary Budget 2020. This was generally approved – the PS party voted in favour, most parties abstained, and only three parties (7 out of 230 members of the parliament) voted against the proposal. The Minister of Finance and the Minister of Economy and Digital Transition will have hearings on this in the coming week, and the final vote on the supplementary budget will take place on 3 July. The Supplementary Budget proposal for this year foresees a deficit of 6.3% and a ratio of public debt to Gross Domestic Product (GDP) of 134.4%.
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.