Business continuity & COVID-19: EMEA Update

By Instinctif Partners

Week 5 of Covid-19 disruption has seen Governments across EMEA not only tackle the impact of nationwide shutdowns but also begin to examine a return to normality. Here’s a snapshot of these measures from our Public Policy Teams in London, Dublin, Brussels, Berlin, Dubai and Johannesburg. Should you wish to explore further or need advice on how to navigate these measures, please do get in touch: lucy.cronin@instinctif.com

Brussels

EU leaders agree on €540 billion rescue package

  • After multiple rounds of intense negotiations, the EU finance ministers finally reached an agreement on a COVID-19 rescue package, which will make available €540 billion in order to support Member States, companies and workers during the current crisis. The package is markedly less ambitious than the €1.5 trillion European Central Bank had called for previously.
  • The funding will be disseminated to Member States via the European Stability Mechanism (ESM), to businesses through the European Investment Bank and to workers via the newly created instrument SURE. Only Eurozone members will have access to ESM funding amounting to €240 billion and funding will not be subject to macroeconomic conditionality.
  • The possibility of issuing so-called ‘coronabonds’ as a means for sharing the costs of the crisis, which has proven particularly controversial, was not part of the agreement and will be discussed further in the coming days. Recovery plans for relaunching the EU economy are also still being negotiated.

EU Council approves €3 billion in emergency aid

  • The European Council of Ministers approved an amendment to the budget for 2020 freeing up €2.7 billion for emergency aid and €300 million for the RescEU medical equipment reserve.
  • The funds will be made available via the European Emergency Support Instrument and can be used for obtaining medical supplies as well as for providing financial support and coordination for other urgent needs during the pandemic.

EU COVID-19 exit strategy

  • The European Commission published its roadmap for an EU-wide strategy for the phase-out of COVID-19 containment measures across the bloc.
  • While recognising the need for tailored national approaches, the roadmap sets out key principles for the relaxation of restrictions and emphasises the importance of a coordinated and timely strategies as well as the need for appropriate accompanying measures. The document also offers a list of concrete recommendations for Member States.

United Kingdom

With Prime Minister Boris Johnson recuperating from COVID-19, Dominic Raab chaired Cabinet and COBR Meetings on Thursday where the current UK lockdown was reviewed. Following announcements from First Ministers that lockdowns will remain in place in Scotland, Wales and Northern Ireland, the Government announced the current restrictions will remain in place for the next three weeks at least. The Government is under increasing pressure – from the media, opposition parties and the public – to talk about the way out of this and what the plan is. The challenge for the Government is how to have a nuanced conversation without sending mixed messages that could lead to confusion and increased virus spread.

The Office of Budget Responsibility has predicted the UK economy will likely contract by 35% between April and July if a lockdown remains in place for three months and that unemployment would rise from 3.8% to 10% meaning an additional 2.1 million people will be out of work; however, they expect unemployment to fall sharply by the end of the year.

  • With reports the PM hopes to be back in the hot seat in the first week of May, it is understood the Government is sympathetic to announcing a loosening of restrictions before the 75th Anniversary of VE Day on May 8, but Downing Street has reiterated all decisions will be guided by the medical and scientific advice.
  • With the UK Parliament finalising plans for a virtual Parliament to allow MPs to question Ministers, we can expect new Labour Leader Keir Starmer to use his first opportunity at the virtual Despatch Box as Opposition Leader to challenge the Government on its plans and criteria to ease restrictions as well as increased testing and supplies of PPE.

Resilience measures

  • Chancellor Rishi Sunak has announced the cut-off date for people to be eligible to benefit from the government’s coronavirus furlough scheme has been extended from February 28 to March 19 in a boost for thousands of workers who started new jobs in that period. The furlough payment scheme is expected to be open from April 20 with money being paid out before the end of the month.
  • The Government has given HS2 rail project formal approval for construction work to begin despite lockdown measures. Contractors will start working on plans and preparing construction sites with further works to be determined on a site-by-site basis in line with Public Health England advice. Construction firms involved in phase one of the high-speed rail project will need to follow social distancing rules.

Ireland

Update on the temporary wage subsidy scheme

  • On April 15 Minister for Finance Pascal Donohoe announced an update to the Temporary Wage Subsidy Scheme to ensure greater staff retention and links between employer and employee. (Official Press Release)
  • Many employers (over 43,000) have registered for the scheme and over 26,000 of these have already received a refund. Minister Donohoe has been advised by the Revenue Commissioners that over 255,000 employees have already received at least one payment under the scheme, and that approximately 84% of employees have also received a top-up payment from their employer.
  • In addition, where an employer wishes to pay a greater level of top-up – beyond the outstanding 15% of previous pay – (in respect of employees with net pay less than €412 per week) in order to bring the employee’s pay to €350 per week then tapering would not be applied to the subsidy.
  • There is no change to the qualification criteria for employers. The Subsidy Scheme is open to employers who self-declare to Revenue that they have experienced significant negative economic disruption due to COVID-19.

Supply chain continuity

  • To ensure continuity of the delivery and distribution of goods, the Road Safety Authority (RSA) and the Department of Transport, Tourism and Sport have agreed to further extend the relaxation of some EU driving and resting time rules for Heavy Goods Vehicle operators and drivers. This extension will apply to all HGV operators and HGV drivers who are subject to the EU driver’s hours and tachograph rules and who are engaged in the carriage of all goods (including oil supplies and so on).
  • This will apply from 17 April to 31 May 2020 and will continue to be reviewed by the RSA during this time.

Flexibility from the Insurance sector

  • The Minister for Finance, Public Expenditure and Reform, Pascal Donohue put pressure this week on the insurance sector to show a degree of ‘flexibility and pragmatism’ from insurers in relation to the payment of premiums, renewal of policies, and use of premises. (Official Press Release)
  • With regard to forbearance, insurers have agreed to reduce premiums for business customers to reflect reduced level of exposure as a result of COVID-19 restrictions. For Employer Liability/ Public Liability and Commercial Motor, insurers will also allow up to 28 days after renewal for payment.
  • With regards Business Premises insurers will maintain cover for unoccupied commercial buildings/ premises not in use due to COVID -19 restriction (for a maximum of 90 days). Appropriate supervision and security of the premises being required, insurers will also support requests for a change of property use during the crisis.

Finance and support for Business during Covid-19

  • Companies aiming to help healthcare responses to the Covid-19 crisis can now collaborate by way of a new online platform. Spearheaded by InterTradeIreland and TechIreland, the all-Ireland platform allows businesses to see quickly potential partners to combat supply chain and manufacturing challenges caused by the pandemic. The platform will give firms a one-stop-shop for buyers and sellers. Presented as an interactive map, it will initially focus on healthcare innovation supports – but will soon expand to include broader economic and societal responses to coronavirus. It will also contain links to public tenders. More info on this platform can be found here.
  • Enterprise Ireland have launched a Lean Business Continuity Voucher which is available to eligible companies to access up to €2,500 in training or advisory services support related to the continued operation of their businesses during the current pandemic. The voucher may be used to obtain services from approved providers.

UAE

Travel & movement

  • The General Command of Abu Dhabi Police, ADP, announced on Wednesday that vehicles registered for commercial purposes will be exempted from registration fees. In a statement, ADP said that the move comes as part of efforts to implement the economic stimulus measures launched by the Abu Dhabi Executive Council.
  • Dubai’s Department of Economic Development has issued a circular detailing food outlets exempted from closure during the National Disinfection Programme. In a statement, the Department, otherwise known as Dubai Economy, said the following nine food trade activities have been exempted from closing so long as they meet coronavirus precautionary measures: meat trading, fruit and vegetable trading, roasters, mills, fish trading, coffee trading and tea trading.
  • UAE announced on Monday that all visas, entry permits and Emirates ID cards will remain valid until the end of 2020, as the country battles the Covid-19 coronavirus.

Anti-Covid-19 measures

  • Dubai is building two field hospitals that will be able to cater to “thousands” of coronavirus patients, as a precaution against a potential surge in cases. Humaid Al Qutami, Director General of Dubai Health Authority, said the emirate had comprehensive plans in place for “all scenarios” and was well prepared, should the number of COVID-19 cases drastically increase.
  • India is fast-tracking procedures to supply hydroxychloroquine (HCQ), a drug found to be efficient in fighting COVID-19, to the UAE. The move follows a request from the UAE government to aid the supply of the pill for which some UAE-based companies had placed orders from India, the Indian Ambassador to the UAE Pavan Kapoor said on Wednesday.

Other

  • Several hotels and one school in Abu Dhabi have contributed 1,030 rooms to Ma’an’s “Together We Are Good” programme to accommodate doctors, nurses, and other medical professionals and support staff working on the frontline.
  • Lt. General H.H. Sheikh Saif bin Zayed Al Nahyan, Deputy Prime Minister and Minister of Interior, has adopted a smart helmet technology capable of monitoring people who may be infected with coronavirus, COVID-19, to be used by specialist police teams around the country. Sheikh Saif announced this measure while heading a remote meeting of the “Happiness and Positivity Council” of the Ministry of Interior.
  • Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, spoke with Bill Gates on Wednesday about the global spread of Covid-19. In a tweet, Sheikh Mohamed said the billionaire philanthropist was a friend who “devoted his life to improving public health”. “The world faces a great challenge and governments and private institutions need to co-ordinate to mobilise resources and launch global initiatives,” he said.

Germany

Planning gradual opening from 4 May onwards
Chancellor Merkel and the federal states agreed during the Corona crisis to extend the contact restrictions. But the measures will be eased, including among others:

  • Starting May 4, priority will be given to students in the graduating classes and those classes that will take their exams in the next school year. This also applies to the last class of primary school, as they have to change schools.
  • Shops with a sales area of up to 800 square meters can reopen.
  • Regardless of the sales area, but subject to the same conditions, car and bicycle shops and bookstores can reopen.
  • Large events are to be prohibited in principle until 31 August. Concrete regulations, for example on the size of the events, are to be made by the federal states.
  • In addition, the federal and state governments “urgently” recommend wearing everyday masks on buses and trains and when shopping.
  • The use of a smartphone app for tracking contacts of infected persons is also to be based on voluntary action.
  • Every company in Germany must also implement a hygiene concept based on an adapted risk assessment and company pandemic planning. The companies are also called upon to continue home-based work possible wherever this is feasible.
    On 30 April, the Federal Chancellor and the heads of the Länder governments will reassess the incidence of infection and the economic and social situation in Germany. In the light of these events, further measures can then be decided on from 4 May.

Support for supply chains
The federal and state governments support the economy in restoring disrupted international supply chains. To this end, the Federal and Länder Ministries of Economics are setting up contact points for affected companies. At the political level, these contact points are intended to help ensure that the manufacture and supply of necessary supplier products can be restored smoothly wherever possible. On the federal side, the Federal Foreign Office, the Federal Ministry of Transport and Digital Infrastructure, the Federal Ministry of Finance, which is responsible for customs, and the Federal Ministry of the Interior, Construction and Sport also participate in this contact point.

New task force “Production capacities and production processes”
On 9 April, the Corona Cabinet of the Federal Government decided to set up a new task force “Production Capacities and Production Processes” in addition to the existing procurement staff. The task force at the in the Federal Ministry of Economics and Energy (BMWi) is to support the timely establishment of national and European value-added chains for medical protective equipment, test equipment and active substances in Germany and the European Union and thus make a significant contribution to securing supplies in the medium term. Specifically, it is to enable and promote private sector investment in production capacities. To this end, the Federal Government will support the companies with subsidies and ensure long-term planning for investors.

South Africa

Interest rates
The Monetary Policy Committee reduced interest rates by a further 100 basis points.

Procurement of emergency goods
An Instruction Note 8 of 2019/20 applicable to Public Finance Management Act (PFMA) institutions and a Municipal Finance Management Act (MFMA) Circular 100 for municipalities and municipal entities, to speed up the procurement of goods/commodities required to reduce and control the spread of the virus.

Fiscal response
The government also announced that it is developing a phase 2 fiscal response to Covid-19 that will include:

  • Putting forward clear estimates of the additional health care costs that will be needed.
  • Reprioritising unnecessary expenditure towards these health care costs.
  • The impact of slowdown on our projections for revenue.
  • It should be costed as much as possible (how much is needed?).
  • It should be temporary (clear timeline of 1 year).
  • It must be crafted as a 3rd line of defence for the vulnerable.
  • A clear plan to restore fiscal sustainability and limit the pace of debt accumulation and the growth of contingent liabilities.
  • Supported by an economic recovery plan (structural reforms) and a set of reforms within the fiscal system e.g. clarity on road tolling, reforming the road accident fund in order to unlock that revenue for the fiscus and core government priorities, and consolidation of public entities and reviewing our portfolio of state-owned enterprises.

Re-opening of some businesses
Some hardware and car-part stores will be able to open – but only for emergency supplies:
Essential goods will now include the hardware, “components and supplies needed by tradespeople for emergency repairs at homes”. The hardware and supplies needed by institutions deemed essential, such as hospitals, may also be sold. The same goes for suppliers of car parts for any vehicle “used by a person engaged in essential services work”.

More call centres may open, including those for retailers (and their store cards):
Formally the new regulations say that call centres “necessary to provide health, safety, social support, government and financial services, debt restructuring for consumers of retailers, and access to short-term insurance policies as a result of reduced income or loss of income” may operate.