Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

European countries are writing blank checks to save their economies from coronavirus

European governments are writing blank checks to protect businesses and workers from the deep recession into which the global economy is sinking rapidly because of the coronavirus pandemic.
France has so far taken the boldest approach, promising that no company will be allowed to fail as a consequence of the disease that has prompted businesses large and small to suspend operations. The government will guarantee hundreds of billions worth of loans, delay tax payments and suspend rent and utility bills for smaller firms. And the French state is ready to go further, nationalizing industries if necessary.

"No French company, whatever its size, will be exposed to the risk of collapse," President Emmanuel Macron said in televised national address on Monday.

The ironclad commitment to business, part of a response that Macron compared to being "at war," is the latest in a series of dramatic plans outlined by European governments as they race to confront an outbreak that is killing thousands of people and slamming global giants such as Renault (RNLSY) and Lufthansa (DLAKY), as well as shops, bars and restaurants.

Germany is mobilizing at least €500 billion ($550 billion) in loan guarantees and has pledged to provide unlimited liquidity to companies affected by the pandemic, part of a raft of measures that finance minister Olaf Scholz described last week as a "bazooka." The country will also make it easier for companies to access loans made by the state development bank and delay tax payments for struggling businesses.

"Due to the high degree of uncertainty in the current situation, the government has very deliberately decided to not set any limits on the volume of these measures," the German government said. "If there are any signs of a serious disruption to the economy, the German government ... will use all resources available to counter this forcefully."

On Tuesday, Spain's prime minister unveiled a €200 billion ($220 billion) rescue package and said the government would provide all capital necessary to prevent companies from going bankrupt.

The United Kingdom also joined the fight on Tuesday after being criticized over its delayed response to the crisis, having suggested only on Monday that people avoid gathering in large groups. UK finance minister Rishi Sunak announced that the government will back an initial £330 billion ($400 billion) in loans for companies. Mortgage providers have agreed to delay payments for three months for people affected by the coronavirus, he said.

"We have never faced an economic fight like this one, but we are well prepared," said Sunak. "We will do whatever it takes."
Taken together, the commitments amount to more than $1.5 trillion and they could go much higher.

Economists say that decisive action to support businesses now, coupled with measures to ensure that workers won't face financial ruin if they are laid off, could dramatically limit the trauma caused by restrictions on travel and public life, and help economies bounce back quickly once the crisis is over.

The measures will be needed quickly. Entire manufacturing sectors are coming to a stop in Europe, a trend underscored by an announcement from Germany's Volkswagen (VLKAF) on Tuesday that it's preparing to close most of its manufacturing plants on the continent. That came one day after Fiat Chrysler (FCAU), Peugeot owner PSA Group (PUGOY) and Renault announced the closure of 35 manufacturing facilities in total across Europe.

Economists say the world is plunging into recession, which is defined by two consecutive quarters of negative growth. But analysts at Dutch bank ING said Monday that the "drastic" measures taken by Macron could limit the economic contraction in France to 1% this year.

"We believe that these measures will help the French economy to rebound more quickly after the deep recession caused by Covid-19 and reach the third quarter with a limited number of large bankruptcies and hence an unemployment rate far below what a recession of that magnitude could have caused," they said in a research note.

National governments are finding support from the European Union for their all-in approach. Margrethe Vestager, a top official at the European Commission, said in a statement Tuesday that she was pushing for a relaxation of antitrust rules that would allow struggling companies to receive state grants up to €500,000 ($550,000) and loans with subsidized interest rates.

One laggard is the United States, which has yet to announce major stimulus measures despite having nearly 5,000 coronavirus cases. The Trump administration is proposing a rescue plan that will cost an estimated $850 billion, but there's no guarantee it will be approved by Congress.

House lawmakers have, meanwhile, approved a bill that would improve the social safety net for workers affected by coronavirus, but the paid sick and medical leave provisions would fall well short of what's in place in Europe even if the proposal overcomes resistance from Senate Republicans.

US airlines are running out of cash quickly and will likely need a bailout if they are to survive the crisis, but direct financial assistance for struggling companies could prove controversial in a country that bailed out its banks and carmakers are recently as the global financial crisis.

"We have a lot more work to do," US Treasury Secretary Steven Mnuchin said Tuesday, "and we have to do it quickly."
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Czech Central Bank Governor Rejects Early Euro Entry and Rate-Cut Pressure
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
Vivienne Westwood Casts Cicciolina, 74, in Its New Autumn Campaign
Dejavu: Germany’s Military Expansion Reshapes Europe’s Strategic Balance With France
Morgan Stanley Builds a Wall Street Lead in AI Infrastructure Finance
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Brilliant move: Péter Magyar Moves to Nominate Chess Grandmaster Judit Polgár as Hungary’s President
Spain Defeats Argentina in Extra Time to Win Second World Cup
Current AI Seeks to Build an Open Global AI Infrastructure Outside Big Tech Control
Germany’s Economic Malaise Reopens the Sunday Shopping Debate
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Netherlands Declares Water Shortage Emergency After Drought Pushes Rivers to Historic Lows
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
The Ledger Will Not Trust on Faith
Trump Administration Pressures Banks to Restrict Financial Access for Undocumented Immigrants
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
The AI Race Enters Its Infrastructure Era
Britain Nationalises British Steel to Protect Scunthorpe Production and Strategic Supply
French National Assembly Overrides Senate to Pass Historic Assisted-Dying Legislation
Spanish Prime Minister's Wife Ordered to Stand Trial as Corruption Probes Encircle Governing Party
Zelensky Faces Kyiv Protests Over Ousting of Dynamic Ukrainian Defense Minister
Thomas Tuchel Faces Fierce Backlash After Tactical Retreat Costs England World Cup Final Berth
A Quiet Bastille Day: France Grapples with World Cup Heartbreak and Leftover Fireworks
Spain in Ecstasy: "We Feel Unbeatable, We Taught the Whole World a Lesson"
Spain and UK Dismantle Gibraltar Border Following Landmark Schengen Integration Treaty
Hungary's "Puppet" President to Be Ousted, Orbán Fumes: "Democracy Is Dead"
Forget Tinder: The Surprising Platform Where People Find Love
Harvard Astrophysicist to Lead U.S. Scientific Advisory on Unidentified Aerial Phenomena
Emergency Sirens Activated Across Bahrain as Interior Ministry Issues Shelter Directives
World Cup Visitors Turn American Big-Box Stores Into Souvenir Stops
Netflix Weighs Always-On Channels, Bundles and Short-Form Video
Passenger Is Pulled Partly Outside Ryanair Jet After Window Fails Mid-Flight
The AI Invoice Shock: Layoffs Didn't Save Managers Money — They Cost Them More
Concern: Sexually Transmitted Bacterium Among Men Develops Antibiotic Resistance
Passenger Partially Pulled Out of Ryanair Jet After Cabin Window Fails Mid-Flight
Severe Heatwave Drives Dangerous Ground-Level Ozone Pollution Across Two Thirds of European Union
The Physical and Electronic Barriers Disrupting Domestic Wireless Networks
France and Morocco Open World Cup Quarter-Finals as Collina Defends Refereeing
×