Post by pieter on Mar 24, 2020 7:37:00 GMT -7
The Ministry of Economic Affairs and Climate Policy (Dutch: Ministerie van Economische Zaken en Klimaat; EZK) is the Dutch Ministry responsible for Commercial policy, International trade, Industrial policy, Investment policy, Technology policy, Energy policy, Nuclear energy policy, Renewable energy policy, Environmental policy, Climate change policy, Natural resources, Mining, Space policy and Tourism Affairs.
Economic measures related to the corona virus
Dear chairwoman,
The cabinet is currently working on health measures around the corona virus in collaboration with the relevant bodies, such as the National Institute for Public Health and the Environment (RIVM). During the Work Order of 10 March last, your House requested a letter looking at the measures that the government is taking with regard to the economic impact of the corona virus. This letter discusses the measures that are currently active and measures that are being taken in the short term.
It is evident that the coronavirus outbreak will have an impact on the global, European and Dutch economies. The economic consequences are also noticeable in the Netherlands. The exact impact on the Dutch economy will depend on the speed with which the coronavirus comes under control at home and abroad, which cannot be predicted with certainty at present.
What is certain is that the Dutch economy is in good shape and has sufficient buffers to absorb the negative economic consequences of the virus. Unemployment is at a historically low level and both business in general and the government have sufficient financial buffers.
In addition, the resilience of the financial sector has recently been strengthened. From this strong starting position, far-reaching government measures in the economic field do not seem necessary for the time being. After all, an excessive policy response can have unnecessary side effects. It is therefore important to act deliberately.
The cabinet focuses on customization and will deploy instruments if the situation requires it. It is impossible to say in advance what effects will play a role in the long term. The Cabinet, together with the social partners, among others, is keeping a close eye on the situation in order to take all necessary and appropriate measures and precautionary measures in a timely manner, as indicated by the Cabinet, if the situation so requires. This letter first addresses national and then European measures.
The Zuidas (literally South Axis in Dutch) is a rapidly developing business district in the city of Amsterdam in the Netherlands. The Zuidas is also known as the 'Financial Mile'. It lies between the rivers Amstel and Schinkel along the ringway A10. The greatest influences for the development of the Zuidas are La Défense in Paris and Canary Wharf in London. In size it can best be compared with the Noordruimte/Espace Nord in Brussels. The Zuidas remotely reminds me of the Central Business District (CBD) of Warsaw.
1. National measures
Initially, the corona virus mainly affects the supply side of the economy. Due to the long, globally organized supply chains, entrepreneurs can get into trouble if, for example, there is a delay in the supply of raw materials or semi-finished products. At present, delays in the production and consumption of goods and services can, for example, lead to liquidity problems for entrepreneurs.
At the same time, there may be an impact on the demand side of the economy due to, for example, growing uncertainty, travel restrictions and economic problems in other parts of the world. Countries such as China are now less in demand for Dutch products, such as chips for the car industry. There are also many cancellations of holidays, conferences and other major events in the Netherlands at the moment. The effects can now be felt in the catering and tourism sector.
In addition to the automatic stabilizers from the budget, the Cabinet has instruments to mitigate these economic consequences and is taking measures to use those instruments so effectively. For example, the working time reduction scheme exists to prevent unnecessary redundancies of employees. In order to meet companies' liquidity needs, there is the SME Credit Guarantee measure. This will be expanded. Below is a further explanation of the measures mentioned.
A normal scene on Duch highways under normal circumstances
1.1 Shortening working hours and possible upscaling
Companies that are affected by the consequences of the coronavirus outbreak and meet all the conditions may be eligible for the current working time reduction scheme.
Short-time working is an existing scheme that companies can rely on that have a temporary loss of working hours due to an emergency. In other words: there is temporarily no more work for (a part of) the staff due to circumstances that are beyond the normal business risk. This calamity must result in a job loss for at least two weeks and a maximum of 24 weeks. There must also be no work for at least twenty percent of the staff. For that part of the staff, employers can then claim unemployment benefit (WW). The employees involved will then use their unemployment rights. They must therefore have built up unemployment rights.
The Ministry of Social Affairs and Employment (SZW) is currently working hard to implement and upscale the working time reduction scheme. The Ministry of Social Affairs and Employment announces on a daily basis how many applications have been submitted, which have been accepted and which have been rejected. The number of applications submitted is now 1,700 (as of March 11, 2020). Additional people were employed at SZW to scale up the processing of applications. The UWV is also working on increasing processing capacity. The basic principle in the implementation of the scheme is that the applicant is responsible for the correctness of the data supplied and compliance with the conditions for the scheme. Just in case the capacity of other options may be considered for the implementation of the short-time working scheme.
Self-employed persons cannot rely on the short-time working scheme because they do not employ staff. Self-employed persons who run into problems due to the coronavirus outbreak can appeal to the Bbz (Decree on assistance for self-employed persons 2004) if they meet the conditions for this scheme. Bbz is carried out by municipalities. Self-employed persons who want to appeal to the Bbz must turn to the municipality where they are registered.
1.2 Broadening the Guarantee for SME loans (BMKB)
Businesses, especially SMEs, may face liquidity problems due to the corona virus and wider economic impact. Banks and other financiers can help companies by temporarily providing a bridging loan or an increase in the Current Account (RC loan). Suspension of repayments of existing credit lines is also an option that financiers can take themselves. If the problems increase, measures may be needed to support SMEs.
The State Secretary of Economic Affairs and Climate (EZK) therefore strives to mitigate the risks with a temporary expansion of the BMKB by the end of March, so that companies with a healthy future perspective can continue to be financed. This after consultation with the Dutch Banking Association and the business community. With the BMKB, the government partly guarantees companies that want to take out a loan, but are unable to offer enough guarantees to the financier (especially banks) involved.
Companies that are affected by the consequences of the coronavirus and are therefore experiencing liquidity problems can temporarily count on additional favorable conditions under the BMKB. A new temporary measure (valid until 1 April 2021) will be introduced - which will be deployed for the broad target group of SMEs - with which the State will offer a higher guarantee share in the BMKB. In the current scheme, the guarantee loan concerns 50% of the credit that the financier (often a bank) provides. The government guarantee amounts to 90% of this guarantee credit. For this measure, the amount of the surety loan in the BMKB will be increased from 50% to 75%. This measure can be used by companies and is intended for bridging credit or increasing current account credit with a financier, with a maximum term of 1 year. A number of other conditions in the BMKB will also be relaxed. This helps companies to continue to meet their daily payment obligations. The total cost of this measure in the BMKB is estimated at between 20 and 25 million euros.
In addition, transparent communication from the government to the entrepreneur is important to avoid ambiguities. That is why the cabinet has close contact with trade associations, business associations VNO-NCW and MKB-Nederland and the Chamber of Commerce. Entrepreneurs are also very alert. Which is good. Of course they can also have questions. The cabinet considers it important that they can go to a central location. In addition to the information on the websites Rijksoverheid.nl/coronavirus and RIVM, they can also call the advisory team of the Chamber of Commerce on telephone number 0800-2117. The provision of information to entrepreneurs is continuously supplemented and sharpened on the basis of the questions received. The same applies to the provision of information about working conditions. Employers have many practical questions about how the general guidelines of RIVM can be translated into the concrete situation on the work floor. Occupational physicians, occupational health and safety services or core occupational health and safety experts can assist the employer in that translation. SZW is in consultation with these occupational health and safety professionals to ensure the best possible provision of information.
1.3 Fiscal policy and automatic stabilization
The Dutch public finances are in good shape. This means that we can take whatever measures we consider necessary at the moment. If additional policy is needed, there is also room for it. The Dutch budget system is aimed at automatically stabilizing the economy; there is no need to cut back on economic setbacks. This means that economic shocks may be directly absorbed by higher unemployment benefits and assistance, and lower tax revenues (such as VAT). Where the medical control of the virus also necessitates necessary measures that lead to an extra budgetary burden in the government-wide picture, for example for the benefit of employees in the healthcare sector, the Cabinet will incorporate this. In the event of an epidemic, it is sometimes necessary to take decisions in the very short term, decisions that will also have financial consequences within the healthcare sector. It goes without saying that we will do what is necessary.
1.4 Taxation
In order to ensure that entrepreneurs can cope with liquidity problems, there is the possibility to request special deferral of payment in income tax, corporate tax, turnover tax and wage tax. The Tax and Customs Administration will grant deferment of payment if the entrepreneur motivates in writing that he has run into problems due to the corona crisis. As soon as the request for postponement has been received by the Tax Authorities, the Tax Authorities will stop the collection. Individual assessment of the request will take place later. The usual deferral requirements remain. In order to accommodate entrepreneurs, the Tax and Customs Administration will omit or reverse a default penalty for late or late payment. Requests for deferrals must be processed manually, so that processing times can increase if many requests are received.
In addition, entrepreneurs now pay tax on the basis of a provisional assessment of income tax or corporate tax. Entrepreneurs who expect a lower profit due to the corona crisis can apply for a reduction in the provisional assessment so that they immediately pay less tax. These requests will be granted by the Tax Authorities.
1.5 Monitoring of financial markets
As described above, the economic consequences of the coronavirus can (also) affect companies. This may result in companies temporarily needing extra liquidity or temporarily having more trouble paying off existing loans. Depending on the extent to which this happens, this has an impact on financial institutions. Important steps have been taken in recent years to make the financial sector more resilient. In this way, buffers have been built up that help banks to maintain lending and absorb potential losses. The Dutch financial sector is therefore in good shape and can take a beating. In addition, financial institutions take continuous measures to ensure the continuity of critical processes.
Although companies are experiencing the first problems of the coronavirus, there are currently no concrete signs that there are large-scale (payment) problems with companies and their lenders, or other types of stress, for example in the interbank markets. That may of course change in the future. That is why it is important to be vigilant. The European Central Bank (ECB), the Dutch Bank (DNB) and the Authority for the Financial Markets (AFM) are monitoring the situation. The Cabinet maintains close contact with DNB and AFM. Consultations with the financial sector are also taking place at the initiative of DNB, together with the Ministry of Finance and AFM, in the short term. The aim of the consultation is to discuss how the corona virus affects the sector and to discuss the latest developments.
2. Measures at international and European level
At international level, various forums are also discussing the measures to be taken to mitigate the economic consequences of the coronavirus. Given the global nature of the outbreak, the government believes that such bodies are of great importance for the exchange of information between countries and institutions, as well as for the coordination of policy.
For example, on March 4, a conference call was held between the International Monetary and Financial Committee (IMFC) and the Eurogroup on the economic and financial developments resulting from the corona virus. The Eurogroup has adopted a statement welcoming the national measures taken by Member States to combat the virus, as well as the steps the European Commission is taking to coordinate information exchange. The statement also states that the next Eurogroup will discuss the economic situation and the possible policy response. The IMFC discussed the economic impact of the coronavirus, the national measures taken and cooperation between members to mitigate the effects of the coronavirus virus. The IMFC called on the IMF to use its available tools if necessary to support countries affected by the outbreak. A video conference with members of the European Council took place on Tuesday 10 March on the spread of the corona virus; your House will receive a separate report of this. During this discussion, the economic impact was referred to the Eurogroup and Ecofin in the upcoming March 16 and 17 2020. Finally, the European Commission has appointed the members of the About 753.000.000 results.
Informed the European Council of its intention to make a proposal to the Council and the European Parliament for a Corona Response Investment Initiative. This is in addition to existing instruments in the European budget to respond to such bottlenecks as the European Solidarity Fund and the European Emergency Relief Reserve.
Mitigation of the economic consequences of the corona virus will also be discussed more frequently in other international contexts in the near future. The House will be informed of this via the usual channels.
3. Continued
As indicated above, the Cabinet will continue to monitor the economic situation surrounding the coronavirus closely, in close cooperation with the relevant national and international institutions, and if necessary take all necessary and appropriate follow-up measures in time. Where developments occur, the cabinet will communicate in a timely, clear and transparent manner.
Eric Wiebes, Minister of Economic Affairs and Climate
Wopke Hoekstra Minister of Finance
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Wouter Koolmees, Minister of Social Affairs and Employment
