Wednesday18 March 2020 ★ FINANCIAL TIMES 3
JA M E S S H OT T E R— WARSAW
R I C H A R D M I L N E— OSLO
SA M F L E M I N G— BRUSSELS
Long queues have built up on Poland’s
border with Germany as aggressive
measures taken by Warsaw to stop the
spread ofcoronavirusbegin to slow the
flow of goods along the EU’s key east-
westaxis.
Truck drivers on the A4, one of Ger-
many’s main transport arteries, which
stretches from Aachen on the western
border with Holland to Görlitz on the
eastern border with Poland, faced
queues of up to 40kmyesterday.
At the Jedrzychowice crossing, driv-
ers had to wait up to 18 hours to enter
Poland, according to local media
reports. Goods traffic on the Czech-
Polish border crossing at Slone faced
delays of around 15 hours.
Poland all but closed itsborderson
Sunday as part ofwide-rangingmeas-
ures to minimise imported cases of the
virus, cancelling international rail, air
and bus connections.
Poles, foreigners with Polish resi-
dence permitsand truck drivers fer-
rying goods across the continent are
still allowed to enter the central
European country. However, the large
numbers of Poles trying to return
home by road, and the time taken to
carry out the ID and temperature
checks that have been introduced
since last week, are slowing border
crossings dramatically.
“The Polish decisions on border
and quarantine procedures have basi-
cally cutoff the three Baltic countries
from mainland Europe,” said a senior
EU diplomat. “They also pose prob-
lems for the transport of goods and
supply chains. “The situation is get-
ting very difficult very quickly. It is
now of utmost importance to create
corridors for the transit of people
and goods through Poland.”
Frank Huster, head of the DSLV,
which represents Germany’s top logis-
tics companies, such asDB Schenker,
Deutsche PostandKuehne + Nagel, said
that although the delays would be prob-
lematic for time-critical deliveries, they
were not so serious as to threaten the
supplies of essential goods.
“To conclude from this that super-
markets will not be stocked orthat baby
food will not arrive on time would be
incorrect,” he said.
The border closures have also created
problems for thousands of citizens from
the Baltic states trying to get home from
Germany via Poland. Heiko Maas, Ger-
man foreign minister, discussed by tele-
phone ways to facilitate travellers with
Jacek Czaputowicz, his Polish colleague,
the German foreign ministry said on
Twitteryesterday. He also spoke with
his Baltic colleagues about how to help
stranded travellers.
Goods in transit
Queues build after Poland
tightens border controls
C O R O N AV I R U S
An emergency
unit of the
Spanish army at
a train station in
Granada, Spain
yesterday
Carlos Gil/AP3 The government is making up to €500bn in
loans available to companies hit by the pandemic.
Most of these will be provided via KfW, the state
development bank. The loans will be available to
all companies, from SMEs to blue-chips.“This is
the bazooka,”said Olaf Scholz, finance minister.
3 Programme of export credits and other
guarantees to help companies in crisis to be
expanded.
3 Companies affected by coronavirus can also
defer “billions of euros” in tax payments.
3 The administration is expanding a
subsidised scheme to compensate
workers sent home by their employers
during an economic crisis. The
Bundestag has rushed through a law
expanding access to this compensation,
known asKurzarbeitergeld. The wages of about
1.5m Germans were subsidised by thescheme
during the 2008 financial crisis at acost to the
taxpayer of €8bn, according to Deutsche Bank.
3 Bavaria, a wealthy southern state that is home
toBMWandSiemens, has launched a €10bn fund
to buy stakes in struggling companies.
3 President Emmanuel Macronhas promised
unlimited budgetary support for companies and
employees affected by thepandemic, a
multipronged strategy that Bruno Le Maire,the
finance minister, says will cost €45bn.
3 Mr Macron launched the initiative, including an
“exceptional and massive” mechanism to pay
workers temporarily laid off by crisis-stricken
businesses, in a speech to the nation. The
support payments are expected to be the most
costly item in France’s array of measures.
3 Mr Le Maire said ammunition to prop up
the economy also included €300bn of
guarantees for bank loans to businesses
and €1tn of such guarantees from
European institutions.
3 Other moves include the possible rescue of
companies with state shareholdings, such asAir
France, deferred company tax and social security
payments, and “sick leave” payments to parents
who are not ill but have to stay at home to look
after their children because schools are closed.
3 The finance ministry was on Monday
establishing a solidarity fund to manage some of
the new subsidies.
3 Roberto Gualtieri, Italy’s economy minister,
pictured below, has promised that “nobody will
be left alone” as Rome starts distributing funds
from the fiscal rescue package of up to €25bn.
3 The main measures are to provide €1.15bn for
thehealth system and €1.5bn for the civil
protection agency, which is in charge of
organising thecoronavirus response.
3 Other measures are expected to
include one-off payments of €500 per
person for the self-employed,
government support for companies
paying redundancy payments to their staff, a
freeze on any worker lay-offs, and a cash bonus
for Italians still working during the lockdown.
3 The package is also expected to include loan
guarantees for businesses hit by the crisis and a
moratorium on loan and mortgage payments.
Exact details have not yet been made public.
3 There will also be financial support forfamilies
wih children at home, and for taxi drivers and
postal workers.
3 Rome is expected to inject more funds into
Alitaliato keep itsnational airline afloat.
3 The government has announced what Pedro
Sánchez, the prime minister, has described as the
“biggest mobilisation of resources in Spain’s
democratic history” to fight the economic impact
of the coronavirus crisis. The biggest part of the
government’s plan is €100bn of state loan
guarantees for business aimed at ensuring
liquidity, especially for small and medium-
sized companies.
3 Other government commitments
would amount to €17bn. The whole
package, including private money
triggered by the loan guarantees, would
total €200bn.
3 Mr Sánchez announced a moratorium on
mortgage payments for people whose income has
been hit by the crisis and a similar moratorium on
utility bills.
3 The decree also makes it easier for people
to be temporarily suspended from work, rather
than laid off, and to retain all of their benefits.
The provision of some social security payments
will be suspended and there will be €600m to
help vulnerable people and those depending on
social services, because of worries about rising
debt levels.
3 A small group of top ministers — the prime
minister, chancellor, foreign secretary, health
secretary and cabinet office secretary — will
oversee the UK economic response with a daily
meeting arranged along wartime lines.
3 The prime minister has said the government
would “do whatever it takes to support our
economy”. The £12bn package of support for the
health service, companies and individuals in last
week’s Budget was ripped up after only six days.
It has been replaced by a much more generous
package at least twice as large, in the first
instance.
3 London has established a £330bn package of
loan guarantees, direct lending from the Bank of
England for large companies and a one year
abolition of property taxes for all companies in
affected sectors. Grants will be available for
smaller companies.
3 All households with difficulty paying mortgages
will be offered a three-month payment holiday,
the first measure in what is expected to be a
much bigger package.
By Martin Arnold, Guy Chazan, Victor Mallet,
Miles Johnson, Daniel Dombey and Chris Giles
Germany France Italy Spain UK
M A RT I N A R N O L D— FRANKFURT
German investor sentiment about the
economy plummeted in March to its
lowest level since the 2008 financial
crisis, as the severe disruption of the
coronaviruspandemic shut down
muchactivityacrossEurope.
The Zew survey of financial market
experts found that sentiment about the
outlook for the eurozone and German
economies suffered record month-on-
month falls in March.
Fears of contagion, school shutdowns,
event cancellations, border closures and
travel restrictions on workers have fro-
zen much economic activity across
Europe and many economists predict
the region will this year suffer its worst
recession for over a decade.
“The majority of experts currently
believe that the coronapandemicis
responsible for a decline in the growth of
real GDP [in Germany] of about 1 per-
centage point,” said Achim Wambach,
Zew president. “For the economy the
signals are red.”
The Zew survey’s measure of investor
sentiment about the economic outlook
for the eurozone fell 59.9 points to reach
minus 49.5, its lowest reading since the
financial crisis.
Investor sentiment about the Ger-
man economy dropped a record
58.2 points to reach minus 49.5, while
the gauge of sentiment about the
current economic situation dropped
27.4 points to minus 43.1.
Mr Wambach said those surveyed
expected German GDP to fall in both the
first and second quarters of 2020.
Angela Merkel, German chancellor,
this week announced a shutdown of
shops, churches, sports facilities, bars
and clubs, while imposing controls on
land borders. She admitted the meas-
ures were “drastic” and unprecedented
in Germany’s postwar history.
Jack Allen-Reynolds, senior Europe
economist at Capital Economics, said
the Zew survey results were consistent
with a 4 per cent contraction in the Ger-
man economy this year.
Carsten Brzeski, economist at ING,
predicted that the economy would
shrink 1.5 per cent this year, given that
much of the country is set to stay at
home for weeks. “The exact timing of
the lockdown in the different regional
states and obviously the eventual length
of the lockdown will determine how the
contraction in consumption and activ-
ity will be spread across the first quarter
and second quarter,” he added.
Zew survey
German investor confidence
lowest since financial crisis
L AU R A P I T E L— ANKARA
Turkey’s central bank has slashed its
benchmark interest rate by 1 percent-
age point as part of emergency meas-
ures aimed at softening the blow of the
coronavirus crisis on the country’s
$750bneconomy.
The central bank’s monetary policy
committee lowered its main one-week
repo rate to 9.75 per cent after holding
an emergency meetingyesterday.
It also announcedit would provide
some funding at an even cheaper rate to
banks that meet certain lending targets.
Othermeasurestaken included
reducing the mandatory amount of
reserves that commercial banks must
hold with the central bank if they meet
certain credit growth conditions and
extending the maturity of swap mecha-
nisms that allow banks to exchange dol-
lars for lira.
Turkey has repeatedly reduced inter-
est rates over the past eight months,
even as a recent uptick in inflation
pushed real rates into negative territory,
as president Recep Tayyip Erdogan
sought to reboot the economy after a
painful 2018 currency crisis followed by
a recession.
The central bank had said in recent
months that its room to cut rates further
was limited. But, announcingyester-
day’s fresh reduction, it said a sharp fall
in international commodity prices,
weakening global trade and the recent
travel restrictions imposed by many
countries battling the spread of the
coronavirus all increased the likelihood
that Turkey’s year-end inflation rate
would be lower than expected.
It also said a recent period of eco-
nomic “rebalancing” had “increased the
resilience of the Turkish economy
against unfavourable shocks”.
Although Turkey has so far suffered
only a limited coronavirus outbreak,
with 47 confirmed cases as of Monday
night, some analysts said the central
bank’s steps were merited given the risk
of a global recession as well as the
impact of measures aimed at limiting
the virus’s spread.
Charles Robertson, chief economist at
Renaissance Capital, an investment
bank, said Turkey’s stimulus pack-
age was “definitely justified” given that
Turkish tourism was likely to be
“crushed” by the coronavirus.
Turkey hosted 52m visitors bringing
in $34.5bn in revenue last year, but its
tourist industry is braced for a severe hit
iftravel limitations imposed across
Europe remain in place formonths.
Europe is also Turkey’s main trading
partner, and a slump in demand on the
continent would dent the country’s
exports. Meanwhile, domestic con-
sumptionis likely to be hurtby the clo-
sure of theatres, cinemas, bars, gyms
and some cafés and restaurants.
Monetary policy
Turkey’s central bank cuts
rates to soften economic blow
Services have been
suspended at
churches including
St Johann Baptist
in Aufkirchen,
near MunichFiscal firepowerWhat countries are doing to mitigate the economic shock
V I C TO R M A L L E T— PARIS
DA N I E L D O M B E Y— MADRID
France, Spain andthe UK have unveiled
emergency packages, including direct
payouts to employees and loans and
guarantees to companies, in an effort to
mitigate the economic blow ofsevere
quarantining measures.
Bruno Le Maire, French finance min-
ister, yesterday detailed €45bn in direct
tax breaks and direct state paymentsin
addition to €300bn of loans. The gov-
ernment stood ready to nationalise
large companies, he said.
In Spain, which has the second-high-
est number of coronavirus cases in
Europe after Italy, Pedro Sánchez,
prime minister, announced €100bn of
loans and guarantees for companies, as
part of what he described as the “biggest
mobilisation of resources in the coun-
try’s democratic history.”
In London, Rishi Sunak, chancellor,
pledged to deploy £330bn worth of gov-
ernment-backed loans and guarantees
— equivalent to 15 per cent of UK gross
domestic product — as well as £20bn in
other direct measures.
The measures aim to mitigate the
shock of imposing stringent movement
restrictions and quarantine measures as
Covid-19 spreads. It comes as Washing-
tonalso unveiled a plan to deploy about
$850bnto help business and workers.
France is engaged in “an economic
and financial war”, Mr Le Maire said.
“This war will be long, it will be violent,
and we must mobilise all our national,
European and G7 forces.”
The eurozone’s second-largest econ-
omy wasexpected to shrink by about
1 per cent this year — instead of growing
more than 1 per cent as previously fore-
cast, Mr Le Maire said.
The €45bn of emergency measures
included €32bn for a month of deferred
corporate tax and social security
charges, and €8.5bn for two months of
state payments to workers temporarily
laid offbecause of the crisis.Thestate
would also guarantee €300bn of bank
loans to businesses to ensure they do not
collapse for want of liquidity, while
eurozone members had collectively
offered €1tn innational guarantees.
Mr Le Maire also said the government
was ready to protect important French
companies, by recapitalising them, buy-
ing shares or even taking them over. “I
could even use the word nationalisation,
if necessary,” he said.
One effect of the rescue package
would be to push this year’s French
budget deficit up to 3.9 per cent of GDP
from a planned 2.2 per cent, according
to budget minister Gérald Darmanin.
Last year’s deficit of 3.1 per cent was
already above EU limits.The bailout
also meansgovernment debt would
increase above the desired limit of 100
per cent of GDP, ministers said.
The main part of the Spanish planis
€100bn of state loan guarantees that Mr
Sánchez said would ensure liquidity for
companies, particularly smaller and
medium ones.
He said thestate would provide busi-
nesses with all the liquidity they
needed,so they could continue operat-
ing. “We are not going to allow tempo-
rary liquidity problems to become prob-
lems of solvency.”
Themeasures also include a promise
to make legal changes to prevent com-
panies from outside the EU from taking
over Spanish businesses in “strategic
sectors”.
Mr Sánchez said other government
commitments would amount to €17bn,
and said the whole package, including
private money triggered by the loan
guarantees, would total €200bn.
Among other moves, Mr Sánchez
announced a moratorium on mortgage
payments for people whose income has
been hit by the crisis, and a similar mor-
atorium for utility bills.
It would also be made easier for peo-
ple to be temporarily suspended from
work, rather than laid off, and to retain
all of their benefits.“No one is going to
be left behind,” Mr Sanchez said.
EU nations announce huge rescue packages
Emergency action from France, Spain and UK aims to soften hit of quarantine measures on companies and individuals
MARCH 18 2020 Section:World Time: 17/3/2020-18:45 User:john.conlon Page Name:WORLD2 USA, Part,Page,Edition:USA, 3 , 1