Spanish President Pedro Sánchez announced Tuesday afternoon that the government will mobilize 200 billion euros in an unprecedented aid package financed with both public and private funding to combat what is hoped will be a short-term economic downturn caused by the spread of the coronavirus in Spain.
In a meeting Tuesday, the government’s cabinet-level the Council of Ministers approved the new package of powerful economic measures to counter the sharp drop in activity due to the health crisis, which will include the mobilization of the equivalent of 20 percent of Spain’s overall annual GDP economic output.
Of the 200-billion-euro package pledged by Sánchez on Tuesday, a total of 117 billion will come entirely from the public sector — 17 billion euros to go toward supporting workers and families hit hardest by the economic standstill accompanying the COVID-19 epidemic and 100 billion to support businesses hardest hit. The remaining 83 billion euros will be provided in complementary funding from the private sector.
Temporary employment adjustment schemes are also being widely considered for use to cushion the impact of COVID-19 on the labour market. Put simply, subsidised furlough schemes are predicted to be a key tool for limiting the shock of the coronavirus outbreak on the labour market on a global scale. Accordingly, you can learn more about some of the different types of furlough schemes out there by taking a look at this furlough definition and by researching other resources for HR departments online.
Ultimately, it is expected that firms and workers will need to be properly incentivised to successfully return to work and to recommence productive activity once the pandemic is under control.
The announcement of Tuesday’s relief package for workers and businesses comes in addition to the 18.2 billion package approved by the government just days ago and will be “the largest capital mobilization in the recent history of Spain,” Sánchez said in a nationally televised announcement.
The bulk of the government’s contribution to the economic bailout package is comprised of 100 billion euros in guaranteed lines of credit for companies that are hard hit by the economic downturn. These funds are possible lines of credit and will not constitute an immediate drain on the Spanish national Treasury.
All of the public aid to businesses will be directed at companies that are trying to keep their workers employed and are essential to the functioning of Spain’s economy, but need government assistance the short-term to do so.
? Click to read PDF [in Spanish] of BOE decree on economic support …
Sánchez said the government intends to spend 17 billion euros to finance policies to help employees and families, including those most vulnerable to the economic fallout of the coronavirus crisis. Those funds will include:
? 600 million euros for social services with special attention to the elderly and dependents, funneled through Spain’s autonomous communities and local entities that will distribute the social assistance;
? A moratorium on suspension of utility services (electricity, water and gas) for non-payment by renters or homeowners whose family finances have been negatively affected by the coronavirus-linked economic downturn;
? A moratorium on mortgage payments on the first residence of people who have seen their income slashes or are unemployed as a result of the coronavirus crisis.
A 83-billion-euro private sector contribution will round up the total value of the economic support package to 200 billion euros, representing an unprecedented capital expenditure valued at 20 percent of Spain’s entire GDP economic output.
In comparison, Germany this week approved a similar bailout package of 500 billion euros that amounts to 15 percent of Germany’s GDP, while France approved a 300-billion-euro package worth 12 percent of its GDP to offset the negative impact of its coronavirus epidemic.
? Click to read more news about Spain’s Coronavirus crisis …
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