Spanish Government greenlights €200 billion to mitigate COVID-19 impact on economy

  • On Tuesday (17 March), the government greenlighted a financial fund worth €200 billion, which corresponds to about 20% of Spain’s annual GDP, to help ease the negative impact of the crisis on the country’s economy.
  • 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%.
  • The new coronavirus has already infected almost 15,000 people in Spain and caused close to 650 deaths.

In what PM Pedro Sánchez described as the “biggest mobilisation of economic resources in the country’s democratic history” on Tuesday (17 March), the government will be allocating €200 billion euros to mitigate the crisis. Half of the money is tied to a public guarantee scheme to ensure liquidity for struggling businesses, with €117 billion coming from the public purse and the rest from private funds.

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.

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.

Specific measures for the agricultural sector

Only article 35 of a 45-page decree is addressed to the agricultural sector: “Financial measures for farmers who have taken out loans because of the 2017 drought”.