European governments have committed more than $1 trillion in state loans, credit guarantees, tax deferrals and other measures to shield businesses from the impact of the coronavirus outbreak.
In one of the boldest moves, France announced Monday that it will guarantee hundreds of billions worth of loans, delay tax payments and suspend rent and utility bills for smaller firms.
“No French company, whatever its size, will be exposed to the risk of collapse,” President Emmanuel Macron said in a televised national address.
Other European countries taking similar approaches to the coronavirus crisis include Germany, Italy, and the United Kingdom, which will back an initial 330 billion euros ($400 billion) in loans for companies. “We have never faced an economic fight like this one, but we are well prepared,” finance minister Rishi Sunak said. “We will do whatever it takes.”
According to CNN, “Economists say that decisive action to support businesses now, coupled with measures to ensure that workers won’t face financial ruin if they are laid off, could dramatically limit the trauma caused by restrictions on travel and public life, and help economies bounce back quickly once the crisis is over.”
CNN noted that “Entire manufacturing sectors are coming to a stop in Europe, a trend underscored by an announcement from Germany’s Volkswagen on Tuesday that it’s preparing to close most of its manufacturing plants on the continent.”
But The Financial Times said that so far, “EU and national authorities’ proposals in response to the disease have lacked the scale and synchronization” of the post-financial crisis European Economic Recovery Plan, which was equal to 1.5% of the EU’s gross domestic product.
“The boldest move so far has come from Sweden, which is allowing businesses to defer tax payments for up to a year at a cost of more than [27.5 billion euros, or $30.3 billion] to the treasury, or 6% of gross domestic product,” the FT said.
Analysts at Dutch bank ING said the “drastic” measures taken by Macron could limit the economic contraction in France to 1% this year.