Spain announces €200 billion relief package against effects of coronavirus

Spanish Prime Minister Pedro Sánchez on Tuesday afternoon announced a relief package of €200 billion to fight the economic fallout of the coronavirus crisis.

The measures include delaying mortgage payments, easing social security contributions and allowing employees who need to care for dependent relatives to reduce their workday by as much as 100%.

These are extraordinary times that require extraordinary measures

Spanish PM Pedro Sánchez

The amount of this package, which comprises public and private funds, is the equivalent of 20% of Spain’s gross domestic product (GDP). “These are extraordinary times that require extraordinary measures,” said Sánchez, of the Socialist Party (PSOE), after the Cabinet meeting that greenlighted the financial assistance against the effects of the new coronavirus, which has already infected more than 11,000 people in Spain and caused close to 500 deaths.

Of the €200 billion fund, half of the money is tied to a public guarantee scheme to ensure liquidity for struggling businesses. Another €17 billion is being earmarked to support the groups most likely to suffer from the effects of the pandemic. “The rest will be private resources. It will be the greatest mobilization of resources in Spain’s entire democratic history,” said the Spanish leader.

Layoffs

At least 100,000 workers are facing temporary layoffs as a result of the halt in economic activity after the country went into lockdown on Saturday. Most retail businesses have closed and foreign nationals are being repatriated after Spanish authorities ordered people to confine themselves to their homes.

“There are still days left before we get the better of the contagion curve,” said Sánchez, urging citizen cooperation. “We need to flatten the curve and make it take a nosedive.” The Spanish health authorities on Tuesday confirmed nearly 2,000 new coronavirus infections and 150 deaths in just 24 hours.

Some of the measures listed in the 45-page decree include the possibility of delaying mortgage payments on primary residences for employees who lose their jobs, as well as self-employed workers who sustain dramatic income losses due to the coronavirus crisis.

The plan contributes to the “social shield” announced by Prime Minister Pedro Sánchez on Saturday

The move is in line with similar action taken by the Italian and French governments, and contributes to the “social shield” announced by Prime Minister Pedro Sánchez on Saturday. The measures aim to prevent the destruction of the country’s productive fabric and to activate social-protection measures for underprivileged groups.

The aid package revolves around four main guidelines: easing the conditions of the temporary collective layoffs (known as ERTEs in Spain), supporting workers and businesses affected by the slump in activity, guaranteeing liquidity for businesses, and supporting research to find a coronavirus vaccine.

The mortgage moratorium will last between one and three months, according to experts consulted by this newspaper.

Liquidity

Sánchez said the government will also guarantee liquidity for at-risk businesses. “The government will provide the necessary liquidity. We are creating a line of public guarantees of up to €100 billion,” he said.

The draft also contemplates lifting social security contribution requirements for small and medium businesses who do not lay off workers, and adjusting the social security system contributions made by self-employed workers whose income plummets due to the crisis.

The decree also allows workers to adapt and reduce their working hours, by as much as 100% if necessary, if they need to provide care to dependents.

The measures also target the self-employed and small businesses, which stand to sustain significant losses. “We will work to allow the self-employed to receive a subsidy if they are affected,” said Sánchez, who called on employers not to lay off workers.

A €30-million allocation will also be made to reinforce “scientific research to develop a vaccine and a cure for Covid-19.” The beneficiaries of these funds are the state scientific research council CSIC and the research institute Carlos III.

English version by Susana Urra.