€200 billion bailout: Spain’s pledge to buffer economy (and freeze mortgages) during coronavirus crisis

€200 billion bailout: Spain's pledge to buffer economy (and freeze mortgages) during coronavirus crisis
Pedro Sanchez has announced a huge bailout package to protect the economy in coronavirus crisis. Archive photo: AFP
The Spanish government will allocate up to €100 billion for loan guarantees to businesses to buffer the economy from the damage caused by the coronavirus outbreak, Prime Minister Pedro Sanchez vowed on Tuesday.

Spain will “mobilise up to €200 billion” in total through public funds set aside to boost jobless benefits and aid workers, as well as potential contributions from the private sector, he said.

The government has vowed a raft of measures to help both businesses and individuals survive as the fallout from the coronavirus threatens to plunge Spain into a recession.

It includes delaying mortgage repayments for those whose income has been negatively affected by the coronavirus and allows people to take time off on full pay if they need to care for dependent relatives.

The package which represents a whopping 20 percent of Spain’s GDP came as some of Spain’s largest employers already announcing mass temporary lay-offs in the wake of the nation being put on lockdown in a bid to slow the spread of COVID-19.

Car manufacturers, restaurant chains and companies involved in the tourist sector, including airlines and hotels, have already announced drastic cut backs.

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A masked traveller at an empty the empty airport in Mallorca. Photo: AFP

Half of the €200 billion fund will be used to ensure liquidity for struggling businesses, the PM explained, while another €17 billion will be put towards supporting those groups of people 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,”  explained Pedro Sánchez announcing the package on Tuesday afternoon.

 “These are extraordinary times that require extraordinary measures.”

“It is an enormous and decisive effort which responds to the magnitude of the social and economic challenge which we are facing.”   

Spain is the fourth worst-hit country in the world after China, Italy and Iran. It has so far recorded over 11,000 cases of the disease and nearly 500 deaths.

The measures which the government approved on Tuesday will allow workers who are laid off from their jobs to collect jobless benefits even if they had not worked long enough to qualify for them.

Self-employed workers will also have easier access to jobless benefits, while 600 million euros will be set aside to provide aid to vulnerable groups such as the elderly and families needing help to have internet connection
during this time.   

“We will spare no expense, nobody will be left behind,” Sanchez said.   

“The goal is to ensure a temporary crisis does not have a permanent negative impact on our labour market.”

The government also tightened rules on foreign investments to make sure that companies from outside of the European Union can not take control of “strategic Spanish firms”.

Sanchez also announced a moratorium on mortgage payments for people struggling financially as a result of the economic turmoil caused by the coronavirus outbreak in a country that is still traumatised by the wave of
evictions which took place during the severe recession of 2008-2011.

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