Life on the planet came to a standstill. A return to the norm if possible, will cost more than any of all postwar recessions. Eventually the virus will show through months, if not years, but now the West makes an advance payment for the treatment and rehabilitation of the economy — and the account goes on trillions of dollars. About it writes BBC.
Pandemic coronavirus in the world has not yet reached its peak, and its duration will depend on how much poorer will live people. In most countries, the quarantine lasts another week, and authorities are warning that in one form or another, it can last six months.
The approximate scale of the disaster can be assessed, with a glimpse at the amount of money that at this very initial and preliminary stage the authorities of the rich countries promised to spend to revive the economy.
The amount of gigantic, unprecedented and frightening. The United States has approved anti-crisis packages worth $2 trillion; Europe still put half a trillion, but collects much more. But in General the country’s “Big twenty” by the end of March already promised to spend about $5 trillion of taxpayers ‘ money to fight the current crisis is about 6% of the annual volume of the world economy.
Unlike previous crises, we are not talking about the printing of new money by Central banks, and the redistribution of already existing and already declining overall real income in favour of those most affected.
In other words, poverty should all. Those who survive, postradavshie will pay for those who will not survive. There can be no winners.
“It is now clear that the world is in recession — predicted the global recession the head of the International monetary Fund Kristalina Georgieva. — It will not be less or worse than what we experienced in 2009.”
The head of the IMF did not rule out a rebound in 2021, but only if the pandemic will be able to curb, but it has generated distortions to be corrected. For this purpose it is necessary “to prevent a wave of bankruptcies and layoffs that threaten not only recovery, but also social harmony”. It costs very expensive.
For that you will have to pay
Coronavirus revealed flaws in the health system of some countries and failure in others. The first emergency spending went precisely there: temporary hospitals, urgent procurement of masks and equipment, hiring of medical personnel. When the dust settles, most countries will have to seriously invest in addressing health issues identified by this pandemic.
However, money is not if economic activity recovers, people and business will not save your job and continue to pay taxes. So first, you have to support them with subsidies, tax holidays, easing of rules and the direct distribution of money.
What, apart from saving the infected and the vaccine, countries will spend in the first place? Each country has its own recipes, but here is a sample list already announced anti-crisis measures.
Almost all countries started with the help of hairdressers, taxi drivers, designers and restaurateurs. They promise grants and concessional loans to small businesses, individual entrepreneurs and self-employed.
Direct distribution of money: every American will receive up to $1200 in cash, Japanese and Greeks also promised to support.
Preferential loans in distress and the foreclosure companies in the most affected industries. The list was opened by the aviation and tourism but it is updated daily.
Tax holidays: deferring payments and social charges on companies and individual entrepreneurs.
The increase in unemployment benefits and easing the eligibility requirements. Ireland, for example, promises to all lost earnings from Covid-19, an allowance of 350 euros per week.
Vacation credit: deferral of payments on debts of companies and individuals.
The subsidy from the budget for payment of salaries of employees of firms forced to idle because of the quarantine. In the Czech Republic, the Netherlands and the UK government promised to take 80-90% of the payroll of private business for a few months.
The compensation costs for staff cuts that people paid severance for a few months, and not dismissed without a penny.
Paid leave to care for children that parents are not in a hurry to go to work while schools are closed. In France — up to two weeks due to the budget.
Some countries (e.g. Switzerland) even offset the losses from the failure of the conferences and other events.
These measures will cost trillions of dollars, take the money in debt, and will have to pay to future generations. However, without CPR the business and the population can not worry Covid-19.
“The current crisis is completely the most serious and ambitious in our memory, — said the chief economist of the club of the rich OECD countries Laurence Boone. This time the problem is not lack of liquidity. This time the main problem — virus”.
“Practically, this means that we are on the verge of a very serious crisis,” she said, adding that if the epidemic will fail to rein in a couple of months and she’ll be back next winter, not a single economist in the world will not venture to predict what it portends.
Who promises to pay
In dealing with the virus, nobody can compare to US. The richest country in the world, quickly became the leader in the number of infected with the coronavirus and, despite public skepticism of U.S. President Donald trump reacted to the epidemic as to trouble of historic proportions.
Congress has appropriated more than $2 trillion to resuscitate the economy. Half a trillion will get large and medium-sized business, $350 billion will be distributed to small entrepreneurs in the form of concessional loans. Americans cash will give $300 billion, and approximately the same number will be used to pay benefits to those who because of a virus I lost my job.
Despite the impressive volume of anti-crisis package, exceeding the annual size of the economy and is comparable to the GDP of Brazil or Italy or Canada, members of Congress and the White house admit that this bill is not final and eventually will have to pay more.
Approved by Congress and signed by the tramp law will cost the States approximately 10% of its annual GDP. Other countries so far are modest, but some are already allocated comparable amounts.
The second largest economy in the world, the European Union is not yet able to agree on joint incentives. However, at the national level, the money is already rolling in.
Germany has allocated more than 150 billion Euro ($165.5 billion), 4.5% of GDP, and promised, if necessary, to increase the bailout package to 800 billion euros ($883 billion), which is the fourth part of the German economy.
Of the most affected by coronavirus EU countries France was more generous of all: she is ready to fork over 350 billion euros ($386 billion), 15% of GDP. Italy has postponed a 25 billion Euro ($27.5 billion), Spain — 10 billion ($11 billion). It’s not more than a couple of percent of their annual income, and nobody believes that this will be enough.
The Netherlands are going to spend 20 billion euros ($22 billion), or 2% of the GDP in the next three months. About the same has allocated Denmark, Poland, Portugal, Ireland and the Czech Republic. Others, like Austria, Greece, Sweden and Estonia, decided not to count on the best, and immediately to prepare for the worst: they unsubscribed from 5% to 10% of GDP to combat a new crisis.
In the same way did other developed countries, including Australia, Canada and Israel. Others, like Japan, while counting their losses and make payment.