How states help businesses in an epidemic

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How officials in the United States, Great Britain, Singapore, China and other countries help small and medium-sized businesses during the COVID-19 epidemic

Coronaviruses and economics: how states help businesses. Photo: ichef.bbci.co.uk

Small and medium-sized businesses form the basis of economic development. However, during the crisis, private enterprises are among the first to face financial problems. Earlier, Pespace magazine described how Ukraine helps businesses during the coronovirus epidemic. Today we will see how governments of other countries deal with the decline of the economy.

Germany

Photo: deutschlandfunk.de

The German government allocated an additional budget of 156 billion euros, of which 50 billion would be provided as grants to small enterprises and self-employed individuals who are not able to obtain bank loans. Companies with up to five employees will be able to receive a lump sum payment of 9 thousand euros for three months. People with 10 employees will get 15 thousand Euros.

Berlin will also pay 500 billion euros for recapitalization of large companies that are experiencing difficulties with 250 or more employees due to the epidemic. In addition, the government can acquire a stake in such companies, the British newspaper financial Times.

what else?

  1. Ban on eviction due to rental loans due to coronovirus crisis
  2. Unlimited loans from KfW State Bank for companies facing liquidity problems
  3. Expansion of export credit programs and other guarantees to help companies in crisis
  4. Exemption from taxes and penalties for their non-payment until December 31, 2020. We are talking about federal taxes (VAT, corporate income tax and insurance tax) as well as energy and aviation taxes. an estimate German Government, Enterprises would normally be able to defer tax payments by billions of euros
  5. Compensation for citizens who are not forced to work due to quarantine. About 2.35 million people are expected to receive a total of 10.05 billion euros from the German Federal Ministry of Labor and Social Affairs
  6. Compulsory social security contribution exemption

United States of america

Photo: ei.marketwatch.com

Earlier, we wrote that due to the coronovirus epidemic, economic activity in the United States is suspended by 29%. According to Moody’s Analytics, three weeks after the introduction of restrictive measures regarding coronavirus production in the country decreased by about $ 350 billion.

To support the economy, the US Congress approved a bill to allocate $ 2.3 trillion to finance the health care system, help small and medium-sized businesses, as well as direct payments to citizens. So, Americans with an income of 75 thousand dollars or less per year Will receive Material support: $ 1.2 thousand + $ 500 per child.

How America Helps Businesses in Crisis:

  1. Allocation of $ 367 billion in loans to small businesses, causing loss of revenue. According to the Financial Times, if the company retains most of the jobs for its employees over the next six months, they will not be required to return the money.
  2. Provision of $ 454 billion to financial institutions for the provision of loans,
    Purchase of loan guarantees and corporate loans of representatives of medium and large businesses
  3. Assistance to the aviation sector in the amount of $ 58 billion through loans and grants. In addition, a total of $ 17 billion will be received by companies that are instrumental in ensuring “national security”

China

Photo: s.abcnews.com

According to the report by the US ratings agency S&P Global Ratings, the PRC economy will suffer the most from the crisis caused by the coronovirus epidemic. Thus, statistical data on the Chinese economy in January and February were much weaker than expected. In addition, in late February it became known that more and more Chinese companies were delaying, or completely shutting down, salaries to their employees. According to officials, their companies suffer economic losses from coronovirus, which is why they have no way to pay labor costs.

However, as S&P chief economist Paul Grunwald said, “early stabilization signs” are already seen in the country.

In early February, the state news agency “Xinhua” Published information on what steps the government is taking to support the business. Therefore, in many Chinese provinces and municipalities, supportive measures were taken:

  1. Introduction of tax and rental benefits
  2. Deferred loan repayment
  3. Reduction in interest rates and elimination of fines on overdue loans
  4. Increased tax privileges for Chinese exporters for goods over 1.4 lakhs from March 20

The Central Bank of China cut the banking system by 1.7 trillion yuan and rates by 10 basis points to increase liquidity and stabilize financial markets. The regulator provided loans to banks at a reduced rate of 300 billion yuan (about 43 billion dollars).

The Chinese Ministry of Commerce issued a circular to the local authorities to actively help enterprises with foreign capital so that they can resume production and work more quickly.

On 11 March In the local press There were reports that major industries in Wuhan would resume work, including public transport, medical supplies and consumer goods enterprises. It was clarified that industries critical to the national and global supply chain could resume production after obtaining permission from the authorities concerned. It was announced that from 20 March other companies would be able to resume their activities.

After production resumed, Chinese companies began reporting an increase in economic activity in late March. The Business Activity Index (PMI), which monitors the activity of companies and service companies, rose from a record low of 28.9% in February to 53% in March (figures above 50% indicate a revival of business activity , Down – deteriorating economic situation)). Nevertheless, China’s National Bureau of Statistics is not in a hurry with positive assessments: “It only says that more than half of the enterprises surveyed successfully (compared to last month) resumed work and production, but that means It is not that the economic activity of the PRC has returned to normal. “.

According to Reuters, new export orders received by Chinese manufacturers, although increased from 28.7% to 46.4% in March, are still at a low level. In the context of the spread of the epidemic in Europe and the United States, such an economic slowdown may last longer, experts say.

Singapore

Photo: ei.marketwatch.com

For a long time, Singapore managed to avoid launching a nationwide quarantine. As of March 26, fewer than 600 cases of infection were reported in the city-state, which is why schools and enterprises continued to work there, although state borders were closed. The technology helped control the spread of Singapore’s disease – in particular, the trisext app.

Nevertheless, on 3 April, the government announced the closure of schools and most enterprises as measures to combat the spread of coronovirus. Regarding strengthening the quarantine of power Announced Additional measures to stimulate the economy, including an allocation of an additional $ 8.3 billion.

Approximate version Bloomberg, Quarantine Singapore would cost $ 10 billion ($ 7 billion) due to the suspension of production. According to Chua Hak Bin, a senior economist at Maybank in Singapore, it accounts for about 2% of the country’s GDP.

How Singapore helps business:

  1. Provision financial help Malaysian Companies. The decision was made after Malaysia closed its borders, depriving nearly 100 thousand citizens of the opportunity to work in Singapore, where more than 400 thousand Malaysians work. The government also agreed to reduce fares for Malaysian workers in hotels and hostels.
  2. The 15% reduction in property tax however, as it later turned out, did not reduce landlords’ rental prices, which is why many tenants faced additional financial difficulties. Later on 6 April, the government Announced Cancellation of rent and tax on foreign workers
  3. Phased out Allotment A total of 60 billion Singapore dollars ($ 4.2 billion), which is 12% of the country’s air force, paid to individuals (about $ 400 per person) and to help companies retain and withdraw jobs for employees.
  4. Creation task Group Led by the country’s deputy prime minister Heng Sui Keith, who will help enterprises solve problems during an epidemic. The politician will also work with hotel and hostel providers to provide cheaper fares.

Sweden

Photo: telegraph.co.uk

Sweden is one of the few countries that has not yet entered into strict quarantine due to the coronovirus epidemic. There are still cafes, bars and restaurants, kindergartens and elementary schools open, the borders are only partially closed, and the ban on public meetings is up to 500 people. as set forth Business insider, Swedish scholars criticize government policies over fears that in the event of an outbreak, the country’s national health system will be overloaded.

Therefore, according to data as of 9 April, in 10-million strong Sweden, 8.5 thousand cases were officially recorded, 339 – recovered and 696 – dead. For comparison: In Ukraine, with 41.98 million inhabitants: 1.8 thousand sick, 45 – recovered and 57 – dead.

Why quarantine was not introduced in Sweden? According to established traditions, the government headed by the Prime Minister sets budgets and functions for local government agencies, however, the government cannot interfere with their daily decisions. Thus, due to lack of action on behalf of the Swedish Public Health Agency (PHAS), which the government should listen to, no quarantine has been introduced in the country. So, according to the state epidemiologist and head of PHAS Anders TeglinThere is no scientific basis to close the borders between Norway and Denmark in early March.

Also, in early March 20, the media NotedSweden’s export-oriented economy has already faced the consequences of the coronovirus epidemic, noting that markets have been falling for free, long since mass unemployment, and health services under pressure.

On the internet in early April A petition appearedAccording to the report of the British government The Independent, the Swedish government signed more than 2 thousand doctors, scientists and professors to tighten the ban and take drastic measures.

Swedish government is expected soon Will propose a bill, Which will give Parliament more powers over the next three months, including rights to airports and railway stations. At the same time, they want to leave domestic flights unchanged.

Swedish government as an aid to private entrepreneurs and small businesses Got it Next steps:

  1. As of May 31, the state will pay sick leave to employees of limited liability companies. According to media reports, the payment will only amount to 700 kroons for employees and 804 kroons for self-employed, while sickness benefit is usually 80% of salary
  2. Citizens will be able to receive compensation for past sick leave by using the Swedish social insurance agency Försäkringsyassan’s website during this period.
  3. In the case of forced quarantine, self-employed individuals are entitled to receive about 80% of their regular income. Owners of limited liability companies will be able to get 80% of their estimated salary before tax, which they usually get from their business income.

United Kingdom

Photo: s.abcnews.com

Earlier, PaySpace magazine shared information about how the British government helps businesses and citizens during an epidemic. Among the steps taken:

  1. Allocated £ 330 billion ($ 408.8 billion) in loans and guarantees
  2. £ 20 billion ($ 24.8 billion) in tax incentives and cash subsidies
  3. His Majesty’s Ministry of Management for Taxes and Customs (HMRC) has deferred VAT for the current quarter
  4. As part of the government’s Coronavirus Job Retention Scheme program, employers who cannot trade during an epidemic will receive 80% of their salary / income per month (up to £ 2.5 thousand – slightly over $ 3 thousand) ; Self employed citizens
  5. Providing a single social payment and a tax subsidy of £ 1,040 (approximately $ 1.2 thousand)
  6. In addition, 1 billion pounds ($ 1.2 billion) was allocated to help tenants.
  7. A 3-month mortgage holiday has been introduced for all citizens affected by the crisis, including owners of rental properties

Poland

Photo: bostonglobe.com

Newspaper financial times welcome Given how Poland survived the last global economic crisis, the country had not experienced a recession for almost 30 years. Nevertheless, the publication’s experts expressed the view that the government should implement more anti-crisis measures.

It is noted that Poland imposed some of the most stringent restrictions in response to the outbreak of coronovirus. The government closed borders almost immediately, banned large gatherings of people and ordered the closure of most shops that do not sell essential goods. Such measures, being a reasonable response to the epidemic, pose enormous difficulties for the country’s trade, reports FT.

अर्थव्यवस्था का समर्थन करने के लिए, पोलैंड ने 212 बिलियन ज़्लॉटी ($ 52 बिलियन, देश की जीडीपी का 9%) आवंटित किया, जिसके लिए धन्यवाद:

  1. कंपनियां सामाजिक सुरक्षा भुगतानों को टाल सकती हैं
  2. जिन कंपनियों का कारोबार महामारी के परिणामस्वरूप कम हो गया है, उनके कर्मचारियों को 40% तक मजदूरी मिलेगी
  3. स्वरोजगार न्यूनतम वेतन का 80% तक प्राप्त करेगा
  4. 7.5 बिलियन ज़्लॉट्स (1.8 बिलियन डॉलर) को स्वास्थ्य सेवा और 30 बिलियन ज़्लॉटीज़ (7.2 बिलियन डॉलर) को आधारभूत संरचना के लिए आवंटित किया जाएगा

इसके अलावा, देश के केंद्रीय बैंक, जिसने बुधवार को ब्याज दरों को आधा% कम करके 1% के रिकॉर्ड स्तर पर पहुंचा दिया है, को बैंकों की तरलता बढ़ाने और पूंजीगत आवश्यकताओं को कम करने के लिए कई उपाय करने चाहिए। पिछले हफ्ते, पोलिश बैंकों ने संकट से प्रभावित खुदरा और वाणिज्यिक ग्राहकों को तीन महीनों के लिए ऋण अदायगी निलंबित करने की योजना की घोषणा की। सरकार ने नए खुदरा कर को समाप्त करने का भी वादा किया।

व्यावसायिक सहायता: विकसित देश अनुभव

समाचार पत्र फाइनेंशियल टाइम्स बना हुआ संकट के प्रभावों का मुकाबला करने के लिए सबसे अधिक आर्थिक रूप से विकसित देशों (यूएसए और पश्चिमी यूरोप) की सरकारों द्वारा उपयोग किए जाने वाले उपायों की सूची।

सरकारें संकट से कैसे निपटती हैं देशों
व्यवसायों के लिए सरकारी ऋण या क्रेडिट गारंटी प्रदान करना जर्मनी, फ्रांस, इटली, यूनाइटेड किंगडम, स्पेन, अमेरिका
संकट से प्रभावित लोगों को नकद भुगतान जर्मनी, फ्रांस, इटली, यूनाइटेड किंगडम, स्पेन, अमेरिका
टैक्स डिफरल जर्मनी, फ्रांस, स्पेन, ब्रिटेन
क्रेडिट अवकाश परिचय इटली, ब्रिटेन, स्पेन

Read:
Quarantine financial tips
Credit holidays: will Ukrainians forgive debts?
What is a basic income: a panacea for an epidemic or an empty utopia
On leave at your expense: What to do if you lose your job during quarantine
आर्थिक प्रभाव: कोरोनावायरस व्यापार को कैसे प्रभावित करता है


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