FINANCE

Pandemic support to restart only in case of vaccine-defying variant

It will only resume if a strain is not covered by vaccines

pandemic-support-to-restart-only-in-case-of-vaccine-defying-variant

The government is putting an end to support measures and the suspension of activities, even though the coronavirus continues to affect the economy and society, and only the emergence of a variant that could not be contained by the existing vaccines would reverse that, sources say.

“No activities will be stopped for the vaccinated,” a top Finance Ministry official said, noting that the only case for reversing the plan for this summer and the coming fall is for a new variant to be beyond reach of the vaccines, which at this stage does not appear likely.

The same official notes that the support measures are ending even for enterprises that will shut down due to Covid-19. Therefore, in cases of fines and forced shutdowns for not sticking to the health protocols there will be no labor contract suspensions and compensations for workers or employers, or even any new cheap state loans or funding programs.

This practically means the conclusion of discussions on whether the cash reserves of 34 billion euros could be utilized for support measures similar to those offered in the last 16 months. It also puts to bed any debate about taking recourse to the credit line of the European Stability Mechanism (ESM) even though it offers favorable funding terms. Still, the credit line will be available next year too.

Market representatives have insisted that continued support is necessary for the economy.

Government officials, for their part, note that since the start of the health crisis the state has handed out  €41 billion (€23.1 billion in 2020, €15.8 billion this year and another €2.1 billion scheduled for 2022) – a staggering amount for the country’s standards. In certain cases, the program can even be described as “helicopter money” as the needs for the immediate supply of liquidity in the economy led to the financing even of enterprises that were not significantly hurt by the pandemic.

Quite a few enterprises have used the cheap state loans for radical renovations and others have put the money into their bank accounts. On the contrary, the programs have not helped companies founded in 2020, which had zero to minimal state support.