The coronavirus continues to spread, plunging stock exchanges and companies into crisis mode. Countries around the world have already reacted, and Germany is also planning measures.
Governments worldwide have already responded to the epidemic with financial and economic policy measures. This Sunday, the German government is also discussing measures to cushion the economic consequences of the coronavirus crisis.
Recently, there had been indications that the coalition wants to lower the hurdles for companies to send employees on short-time work. There are also so-called bridging loans to help companies financially in the short term, as well as guarantees or tax deferrals.
The SPD had proposed to bring forward to this summer the reduction of the solidarity surcharge, which was originally planned for 2021, in order to stimulate demand. The Social Democrats had also renewed their call for more state investment in infrastructure.
How other countries in the world are trying to contain the economic impact – an overview:
Eurogroup finance ministers have announced that they will use all available instruments to boost the eurozone economy. The European Central Bank (ECB) also pledged to take “appropriate and targeted measures” before its meeting next Thursday. Some analysts believe that a further negative decline in deposit rates to encourage lending is possible – at the same time, observers are skeptical that the ECB can still offer strong incentives to the economy given its already loose monetary policy.
Italy, already over-indebted and affected by the Corona crisis like no other European country, has already released 7.5 billion euros from its budget to boost the economy. Part of the aid is to go to affected businesses and families.
France called for a boost to the eurozone. The euro countries should pave the way for this to be done by resorting to budgetary means. In addition, the government is discussing possible tax cuts for companies – similar to what is being discussed in Germany.
Britain will present its first budget since the Brexit on Wednesday. It is expected that London will stick to its planned enormous spending on infrastructure projects in the coronavirus crisis. The head of the Bank of England, Mark Carney, stressed that the central bank has “enough ammunition” to counteract the corona crisis – despite the British central bank’s low key interest rate of 0.75 percent.
USA and Canada
In the USA and Canada, central banks initially reacted to the corona virus. On Tuesday, the U.S. Federal Reserve (Fed) unexpectedly cut the key interest rate by half a percentage point. It is now between 1.0 and 1.25 percent. It justified this by citing “risks to economic activity” posed by the coronavirus. Shortly afterwards, the Canadian central bank also lowered the key interest rate to 1.25 percent.
On Thursday, the US Congress also approved a package of 8.3 billion dollars (7.5 billion euros) – not for companies, however, but for emergency measures to fight the epidemic.
According to estimates by the rating agency Standard & Poor’s, the corona epidemic could cost the economies of the Asia-Pacific region around 200 billion dollars.
China, where the epidemic began in December, cut its key interest rate in response to the devastating economic slump and announced further measures such as tax cuts and financial aid for the affected regions.
Hong Kong reacted with an unusual measure: all residents permanently registered in the financial metropolis will receive 10,000 Hong Kong dollars (1,180 euros) in cash. In total, the city leadership is providing 120 billion dollars to fight the economic consequences of the epidemic.
Japan’s central bank addressed investors in an extraordinary statement earlier this week, assuring them that it would ensure the “stability of the financial markets”.
IMF and World Bank
The head of the International Monetary Fund (IMF), Kristalina Georgieva, said the epidemic was “a global problem that calls for a global response”. IMF member states affected by the epidemic are to be provided with financial aid totalling 50 billion dollars.
The World Bank has also promised assistance of 12 billion dollars. The aim is to provide “rapid” and “effective” help, especially to poorer countries.