Bruegel datasets

The fiscal response to the economic fallout from the coronavirus

Last update: 08 April 2020


by Julia Anderson, Enrico Bergamini, Sybrand Brekelmans, Aliénor Cameron, Zsolt Darvas, Marta Domínguez Jíménez


The various lock-down measures in response to coronavirus have halted economic activity in certain sectors and harshly disrupted others. The resulting job losses and bankruptcies are likely to create major economic strains for millions in Europe and worldwide.

In the euro area, the European Central Bank has reacted with strong monetary policy and supervisory measures announced on 12 and 18 March 2020. Governments throughout the European Union have started to announce and implement various fiscal measures to contain the economic fallout. European state aid rules and fiscal rules have been suspended.

In this dataset we summarise and compare the discretionary fiscal responses of EU countries, the United Kingdom and the United States. We consider only adopted measures. Other measures under discussion will be added to our comparison when adopted.

We consider only discretionary fiscal measures, while budget balances will deteriorate because of the likely severe economic downturn, leading to lower tax revenues and higher unemployment benefit payments.

We group discretionary fiscal measures into three categories:

  • Immediate fiscal impulse: additional government spending (such as medical resources, keeping people employed, subsidising SMEs, public investment) and foregone revenues (such as the cancellation of certain taxes and social security contributions). These types of measures immediately lead to deterioration of the budget balance without any direct compensation later.
  • Deferrals: several governments have decided to defer certain payments, including taxes and social security contributions, which in principle should be paid back later. These measures improve the liquidity positions of individuals and companies but do not cancel their obligations. Therefore, these measures cause deterioration of the budget balance in 2020, but improve it later. A few countries have also deferred the servicing of loans or the payment of utility bills, which also improve the liquidity positions of those impacted. Even if the loans were granted by private banks and utilities are provided by private providers, the budget balance will deteriorate in 2020 because of lower profits and consequent taxes, but will improve later.
  • Other liquidity provisions and guarantees: these measures include export guarantees, liquidity assistance, credit lines through national development banks. Some of these measures improve the liquidity position of the private sector, but unlike deferrals which are automatic and generally apply to the target groups, credit lines require action from the impacted companies. Credit lines and guarantees might not weaken the budget balance in 2020, but would create contingent liabilities which might turn into actual expenses either in 2020 or later.

The table summarises the amount (as a share of GDP) of these measures by country, while the detailed country-specific measures are explained below.

Discretionary 2020 fiscal measures adopted in response to coronavirus by 30 March 2020, % of 2019 GDP

Immediate fiscal impulse Deferral Other liquidity/guarantee
Belgium 0.7% 1.2% 0.0%
Denmark 2.1% 7.2% 2.9%
France 1.2% 9.4% 12.5%
Germany 6.9% 14.6% 38.6%
Greece 1.1% 2.0% 0.5%
Hungary 0.4% 8.3% 0.0%
Italy 0.9% 13.0% 7.3%
Netherlands 1.6% 3.2% 0.4%
Spain 0.7% 2.0% 9.1%
United Kingdom 1.4% 1.4% 15.1%
United States 5.5% 2.6% 4.1%

Note: we calculate the ratio of the 2020 measures to 2019 GDP, because the 2020 GDP outlook is very uncertain. The category ‘Other liquidity/guarantee‘ includes only government-initiated measures (excludes central bank measures) and shows the total volume of private sector loans/activities covered, not the amount the government put aside for the liquidity support or guarantee (the amount of which is multiplied to cover a much larger amount of private sector activity).

Our calculations differ from some other calculations by clearly discriminating the three categories above. Other calculations, but also sometimes government press releases, combine, for example, tax cancellations and tax deferrals which are very different types of measures.

Beyond new spending measures, some governments likely postpone or cancel some earlier planned expenditures, like certain investments. The reason is partly the need to provide more fiscal resources to the fight against the pandemic and its economic impact, and partly supply disruptions. Such diminished expenditures constitute a negative fiscal impulse. Due to lack of data, we cannot quantify these diminished expenditures.

Country-specific measures

Click on the countries below for their respective dataset:

Belgium
Denmark
France
Germany
Greece
Hungary
Italy
Netherlands
Spain
UK
USA


Belgium

Belgium

National measures (€7.5 billion)

Date of announcement: 6 March 2020 and 20 March 2020

Immediate fiscal impulse (€3 billion):

  • €1.5 billion: Temporary unemployment becomes automatic, is broadened and reinforced. This is the mechanism through which companies can ask for the State to pay for a part of their employees’ salaries when they have to temporarily lay them off due to dramatic economic circumstances – as in the current crisis. There is no more distinction between partial unemployment for economic reasons and partial unemployment due to an unforeseen highly disruptive shock. Companies can automatically access partial unemployment without having to prove their need. The rate of reference, which is the percentage of an employee’s previous salary that is covered by the State, is increased from 65% to 70% (source 1 and 2).
  • €1.5 billion: Active independent workers that were forced to shut down their business by government mandate are eligible for 1291,69 euros per month if they do not have a dependent family and 1614,10 euros per month if they do (source 1 and 2).

Deferrals (€4.5 billion):

  • €4.5 billion: Automatic extension of due date for income tax payments for individuals. Companies’ fiscal payments can be deferred up to 2 months and social contributions can be deferred up to 2 semesters (source 1 and 2).

Walloon measures (€350 million)

Date of announcement: 18 March 2020

Immediate fiscal impulse (€362 million):

  • €115 million: Support to health and social sectors in Wallonia. Funds will go to: sectors that will have to increase their activity (hospitals, retirement homes, social sector and help to handicapped individuals) – €75 million are reserved for this; sectors that will have to reduce or stop their services; sectors that will lose revenue from beneficiaries of their services (source).
  • €2 million: Support to communes that decide to suspend communal taxes (source).
  • €77.7 million (one-third of the €233 million announced to support MSMEs): Creation of a COVID-19 fund to provide Micro, Small and Medium Enterprises (MSMEs) with a one-time compensation of €5000 if they have had to fully shutdown due to government policy and €2500 to businesses that have to partially shut down. The region estimates there are 48900 potential beneficiaries for the €5000 allowance (source). If more than one-third of the potential beneficiaries will claim this benefit, then the cost will be more than €7 million.

Note: The Walloon government allocated €233 million to supporting MSMEs, which includes three main measures: (1) COVID-19 fund, (2) the deferral of fiscal and social payments and (3) measures for public loans guarantees. Given there are no official estimates on how the cost will be split between these three types of measures, we allocate one-third to each.

Deferrals (€116 million):

  • €77.7 million (one-third of the €233 million announced to support MSMEs): All payments due for loan repayment on the 31st of March to SOWALFIN, SOGEPA and SRIW (main public investment and management funds in Wallonia) are deferred with no additional interest for loans equal to or below 2.5 million euros. For loans above this amount, an individual case study will determine whether additional interest fees are added or not. All payments for water fees are also deferred by a month (source 1 and 2).

Note: See the note above.

Other liquidity and guarantee measures (€77.7 million):

  • *€77.7 million (one-third of the €233 million announced to support MSMEs): The SOGEPA and Wallonie Health will provide loans of up to 200000 euros, without private matching, to be reimbursed within one year and with a fixed interest rate of 2%. Additionally, the Walloon government guarantees 50% of uncovered credit lines to companies hit by the crisis, up to 75% of increases in short-term credit lines to help companies during the crisis, and up to 75% of new short-term credit lines (source).

Note: See the note above.

Brussels-region measures (€150 million)

Date of announcement: 19 March 2020

Immediate fiscal impulse (€92 million):

  • €20 million: Regional government pays for salary of workers in social service companies. Payments amount to €14,60 per hour per employee (source).
  • €36 million (estimate): Support to businesses shut down during crisis through a one-time compensation of €4000 to businesses that have to fully shutdown due to government policy (source).

Note: In the absence of an official number, this figure is estimated on the basis that the regional government announced measures amounting to €150 million. Partial unemployment measures and public loan guarantees were each announced to amount to €20 million, so they were subtracted from the total number to find the amount dedicated to the other measures. This amounts to €110 million split between compensation for businesses that have to shut down, deferral of fiscal and social payments and financial and technical support to businesses. We thus divide this amount equally for each of these measures.

  • 36 million: Reduced interest rates for hotel, restaurant and catering companies that employ more than 50 people and their key suppliers; a moratorium on the capital reimbursements of companies in most affected sectors; 200 000 euros given to the Centre pour entreprises en difficultés (centre which helps Brussels-based SMEs) (source).

Note: see previous note.

Deferrals (€36 million):

  • €36 million: Suspension of City Tax (tax on hotel sector) for the first semester of 2020 and of tax on taxi sector (source).

Note: see previous note.

Other liquidity and guarantee measures  (€20 million):

  • €20 million: Public guarantees on loans to companies (source).

Flemish measures (€1.263 billion)

Date of announcement: 18 March 2020

Immediate fiscal impulse (€158 million):

  • €7 million: Additional government investments to buy masks (source).
  • €125 million (estimate): Companies that have fully shut down are given a one-time compensation of €4000. If closures last past the 5th of April 2020, companies will receive an additional €160 per day of shutdown (source).

Note: In the absence of an official estimate, we calculate this estimate based on the number of applications (31 000 to date) and the amount given to each of them (€4000).

  • €6 million: €5 million dedicated to subsidies to tourism industry and €1 million dedicated to subsidies for youth hostels specifically (source).
  • €20 million: Government will pay for 100 000 employee’s utility fees (water, gas and electricity) for 1 month if they are facing technical unemployment.

Deferrals (€1.005 billion):

  • €3 million (estimate): 3-month delay in payments for start-up loans and co-financing loans (source 1 and 2).

Note: In the absence of an official estimate, we calculate this estimate by multiplying the number of firms that are covered (860) by the average loan amount (25000).

  • €1 billion: Property evaluations for companies will not be published until September and company property tax payments will not be due until then (source).
  • €2 million (estimate): 4-month deferral of the annual road tax (source 1 and 2).

Note: In the absence of an official estimate, we calculate this estimate by dividing the annual revenue from the road tax in 2018 (16 million euros) by 12, and multiplying by 4 (months of deferral).

Other liquidity and guarantee measures (€100 million):

  • €100 million: Publicly guaranteed loans of up to 12 months to be taken out before the end of the calendar year (source).

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Denmark

Date of announcement: 15 March 2020

Direct fiscal impulse (DKK 55.9 billion):

Deferrals (DKK 165 billion):

Other liquidity and guarantee measures (DKK 66 billion):

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France

Date of announcement: 12 and 26 March 2020

Immediate fiscal impulse (€29.2 billion):

Deferrals (€228 billion):

Other liquidity and guarantee measures (€302.0 billion):

  • Public guarantee of loans made between 16 and 30 March, up to €300 billion total (source: https://www.economie.gouv.fr/files/files/PDF/2020/Coronavirus-MINEFI-10032020.pdf)
    Large companies that continue paying their shareholders’ dividends cannot benefit from this loan guarantee. (source)
  • €2 billion in public loan guarantees specifically for startups, which can cover up to 90% of the loan, depending on loan maturity. These loans can be distributed by private banks and Bpifrance. (source)
  • €0.5 billion guarantees by internal reallocations within Bpifrance and/or budget allocations (since most of this amount is internal reallocation, not the provision of new resources, we do not count this measure)

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Germany

Germany

Dates of announcements: 9 March 2020, 13 March 2020, 23 March 2020, 24 March 2020, 27 March

Immediate fiscal impulse (€236 billion): 

State-level measures (not included in total)

Deferrals (€500 billion): 

€500 billion (Bruegel estimate) tax deferrals for businesses: €70 billion for direct corporate income tax; €430 billion if include indirect taxes and social contributions (assuming 75% tax deferral and 5% GDP loss in 2020)

Other liquidity and guarantee measures (€1,322 billion): 

 

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Greece

Date of announcement: 30 March 2020

Immediate fiscal impulse (€2.1 billion):

  • €1.4 billion in extraordinary financial support to employees, including providing 800 euro to up to 1.7 million employees (81% of all private sector total) (source)
  • €150 million in support for areas of the primary sector affected by the health crisis through the Ministry of Rural Development and Food (source)
  • €550 million in additional expenditure, including increased health expenditure, supporting health care workers and covering employees Easter bonus (source)

Deferrals (€3.7 billion):

  • €2.1 billion in suspension of tax liabilities, including deferred tax expenditure for affected businesses and employees and 25% tax discounts for those who choose not to defer payment (source)
  • €1.6 billion in suspension of social security contributions and subsidies of the contributions of the self-employed, small business owners and employees (source)

Other liquidity and guarantee measures (€1 billion):

  • €1 billion financing scheme to provide wholly or partially repayable direct financial support to active SMEs affected by the health crisis (source)

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Hungary

Date of announcements: 17 March 2020 (https://magyarkozlony.hu/dokumentumok/0a45e158ca1d1b307b2057292893bc7981c3d500/megtekintes) and 23 March 2020 (https://magyarkozlony.hu/dokumentumok/9ede64f74b967131f6e0b99bf4e092775ce6633c/megtekintes)

Immediate fiscal impulse (HUF 208.6 billion):

Deferrals (HUF 3873 billion): 

  • HUF 450 billion (interest) and HUF 3423 billion (capital amortisation) loan repayment moratorium for all households and corporate loans up to 31 December 2020. Amount estimates: HUF 450 billion interest estimate is from the Hungarian Banking Association (http://www.bankszovetseg.hu/hirek-aktualitasok.cshtml?lang=hun&hirId=46). HUF 3423 billion capital amortisation is our estimate by considering outstanding amount and maturity of households and non-financial corporate loans. Household loans are categorised as maturing within a year, within 1 and 5 years and over 5 years. We assumed that the average maturity of loans maturing within 1 and 5 years is 3 years, while the average maturity of loans over 5 years is 10 year for mortgage loans and 7 years for other loans. Information for corporate loans is available for within one year and over one year maturity: we assumed that the average maturity of over one year loans is three years. We then calculated the expected capital amortisation over the next 12 months and then multiplied this value with 9.5/12 to approximate capital amortisation from mid-March to end-December.

Other liquidity and guarantee measures: 

  • No such measure is announced by the government (but the Hungarian central bank announced an number of measures boosting liquidity of the banking system)

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Italy

Date of announcement: 17 March 2020, official text: https://www.gazzettaufficiale.it/eli/id/2020/03/17/20G00034/sg , Ministry of Economics and Finance dedicated page: http://www.mef.gov.it/covid-19/

Immediate fiscal impulse (€16 billion): 

  • €2.4 reduced taxes and contributions for all firms in severely affected sectors (severely affected sectors include tourism and leisure, transport, restaurants and bars, culture, sports, education, events) and all firms below €2 million, which include (a) suspension of VAT payments and contributions in March, (b) 60% tax break of on commercial rents, (c) 50% tax break for sanitization costs, (d) Deducibility of donations for Covid19, (e) Suspension of expiring tax payments demands and tax declarations
  • €10.4 billion for keeping people employed and supporting the unemployed, which include the following measures: (a) All workers: Freezing of layoffs for all workers for two months, independently on the type of contract, where the layoff was opened after February 23rd, including layoffs for economic reasons; (b) All workers: Extension of (various) unemployment insurance mechanisms for all sectors, regions, and employees (9 weeks); (c) Self-employed: €600 bonus for self-employed and autonomous workers; (d) All workers not-working-from-home: €100 salary bonus in March to all workers not in smart working, cap of income of €40000; (e) Working parents: €600 bonus
  • €3.2 billion additional healthcare related spending, which includes: (a) €1.65 billion in the National Emergency Fund, (b) the cost of 20,000 additional staff in the sanitary sector, (c) €150 million for extra-hour payroll costs of NHS personnel; (d) €400 million increase of intensive care units, €50 million subsidies to firms producing protective equipment; (e) €150 million for requisition from private sector for public health purposes of sanitary equipment and facilities (including hotels); (f) €68 million additional medical and nursing personnel in the military; (g) the cost of the possibility to postpone retirement of medical personnel.

Deferrals (€230.7 billion): 

  • € 10.7 billion deferred taxes and contributions for all firms in severely affected sectors and all firms below €2 million, which include; see the measures in the first point above at immediate fiscal response
  • €220 billion moratorium on all loans and mortgages payable in instalments until 30 September of all micro, small, and medium sized firms (SMEs)

Other liquidity and guarantee measures (€130 billion): 

  • €100 billion new loans Central Guarantee Fund for SMEs access to credit
  • €10 billion state guarantee for banks financing big and medium enterprises not in SMEs support fund (500 million guarantees with a multiplier of 20)
  • €10 billion for incentives for liquidity unlocking for banks and enterprises
  • €10 billion in other measures

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Netherlands

Date of announcement: 17 March 2020

Direct fiscal impulse (€12.7 billion):

Deferrals (€26 billion):

Other liquidity and guarantee measures (€3.4 billion):

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Spain

Date of announcement: 12 and 17 March 2020

Immediate fiscal impulse (€8.8 billion):

  • €3.8 billion in medical expenditure (out of these, €2.8 billion will be transferred to regional governments, the remaining €1 billion will be placed in a contingency fund, to be directed by the ministry of health) https://www.boe.es/diario_boe/txt.php?id=BOE-A-2020-3824
  • 25 million in meal allowances to ensure the basic access to food for vulnerable children https://www.boe.es/diario_boe/txt.php?id=BOE-A-2020-3824
  • €5 billion in additional public expenditure corresponding to the package of measures adopted on March 17th to add flexibility to the economy, to preserve jobs, to support workers, firms, families and vulnerable groups, and to fund research on COVID-19. The package includes, among other measures:

Deferrals (€24.4 billion):

Other liquidity and guarantee measures (€112.4 billion):

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United Kingdom

Dates of announcement: 11 March 2020, 17 March 2020, 20 March 2020, 26 March 2020

Immediate fiscal impulse (£30.5 billion):

Deferrals (£30 billion):

Other liquidity and guarantee measures (£331 billion):

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United States

Dates of announcement: 6 March 2020, 18 March 2020, 26 March 2020

Immediate fiscal impulse ($1170.9 billion):

Deferrals ($561 billion):

Other liquidity and guarantee measures ($877 billion):

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Comments to improve the coverage and the estimates are welcome. Please send your comments to [email protected]