Coronavirus: the United States and Europe step up economic measures

Text by: Altin Lazaj

Because of the confinement linked to the coronavirus, the United States and Europe have been confronted since mid-March with an unprecedented collapse of their economic activities. To save the economy and above all avoid the bankruptcy of companies, the States have taken ambitious measures by going into massive debt.

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Both in Europe and in the United States, governments have activated more or less the same financial levers to save businesses, but to varying degrees from one country to another. Business loans, guarantee of bank credits, recapitalizations of certain groups, coverage of short-time working, etc. These measures amount to hundreds of billions of euros.

In Europe, Germany has taken unprecedented measures since the Second World War. Berlin has adopted an emergency plan of 1.1 trillion euros, including public guarantees on loans and direct aid to businesses, especially for SMEs. In France, the government has adopted an economic emergency plan of 110 billion euros, in addition to 300 billion state guarantees for business loans.

Massive use of partial unemployment

Short-time working is the weapon used by the majority of countries affected by coronavirus in Europe to avoid layoffs. The United Kingdom has made it the key to its economic measures. The British government supports 80% of wages in companies in difficulty until June. In Spain, in addition to measures in favor of partial unemployment, the government has prohibited redundancies. Italy goes further, paying financial aid also to undeclared employees. They will be considered as precarious workers. This will cost the state almost 3 billion euros.

Brussels support measures for jobs, workers, companies and member states amount to 540 billion euros. The European Investment Bank will also create a pan-European guarantee fund for businesses, primarily for SMEs. It should mobilize up to 200 billion euros. The money will not be automatically spent, but available to those states that request it.

Strong measures also taken in the United States

The US Congress has already approved a $ 2.2 trillion economic support plan. 350 billion will be devoted to SMEs which have seen their activity stopped or drastically reduced with the arrival in the country of the coronavirus pandemic. A $ 250 billion extension is being negotiated and is the subject of a standoff between Donald Trump and the opposition.

But unlike Europe, partial unemployment does not exist in the United States. Companies therefore have no choice but to lay off. In one month, 22 million people lost their jobs, the equivalent of the jobs created over the past ten years. The double penalty for these employees who lose their social protection at the same time.

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• United States
• Coronavirus