COVID-19 Recap

 

Orgalim continues to closely monitor the COVID-19 situation. On this page, you can read about the latest policy initiatives and EU developments regarding the COVID-19 crisis that are affecting Europe's technology industries. 

In these difficult times Europe’s industry plays a crucial role in supporting society’s needs. We are therefore calling on Europe’s leaders to prioritise helping our industries, of which 90% are SMEs, to survive and regain their financial vigour.

On this page you can find news published in the last 14 days. If you would like to receive earlier policy updates or you have any other questions or would like to talk to a member of the team, please do get in touch: communications@orgalim.eu.

 
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NEW Europe’s technology industries hit hard by coronavirus at a most vulnerable time

Manufacturing in the Euro-area experienced a substantial deterioration in its business cycle as the impact of COVID-19 hit both the demand and supply sides of the technology industry. In the industries represented by Orgalim – a substantial part of Europe's total industry – the reduction in output was unprecedentedly strong, overtaking that experienced during the financial crisis of 2008-2009. Reports from Orgalim’s national member associations show a consistent picture of the significant impact of the crisis, with slight deviations in numbers. Read the new economic report compiled by Orgalim’s economists here.

 

NEW EU-Japan leaders' video conference meeting to focus on the coronavirus pandemic and coordinated response

On 26 May, Commission President Ursula von der Leyen, Council President Charles Michel and the Prime Minister of Japan Shinzō Abe will hold a virtual leaders' meeting to address matters related to the coronavirus pandemic, preparations for the upcoming G7 summit, and the implementation of the EU-Japan Strategic Partnership. The leaders are expected to address the economic recovery, restoring international trade, assisting vulnerable populations, as well as the virus' impact on geopolitical issues. Presidents von der Leyen and Michel and Prime Minister Abe are also expected to look to strengthen bilateral cooperation in a number of areas, building on the EU-Japan Strategic Partnership Agreement and the Economic Partnership Agreement, as well as the Partnership on Sustainable Connectivity and Quality Infrastructure.

 

NEW European Banking Authority

On 25 May, the European Banking Authority (EBA) published a preliminary assessment of the impact of COVID-19 on the EU banking sector. 

 

NEW Eurostat

On 22 May, the European Statistical office Eurostat issued a study analysing which traded goods are affected the most by the COVID-19 crisis, with machinery and automotive falling the most in terms of outside-EU exports and imports.

 

NEW Eurofound policy measures database

On 18 May, the European Foundation for the Improvement of Living and Working Conditions made public the database COVID-19 EU PolicyWatch aiming to map measures introduced to overcome the social and economic effects on businesses, workers and citizens of the COVID-19 crisis. It also includes information on the role played by social partners in the design and implementation of the measures. 

The scope includes large-scale government measures and wider collective agreements, as well as regional and local initiatives and support measures for smaller groups of workers. As the situation is evolving, measures are newly implemented, changed or cancelled and replaced at rapid speed. It is planned to update the cases in July and October 2020 with information on the actual uptake of the main measures.
 

 

European Semester Spring Package 

On 20 May, the Commission proposed, as part of its European Semester Spring Package, a set of country-specific recommendations (CSRs) providing economic policy guidance to all EU Member States. These recommendations have been adapted to the context of the COVID-19 crisis and focused on the most urgent challenges and on relaunching sustainable growth. The recommendations are structured around two objectives: in the short-term, mitigating the coronavirus pandemic's severe negative socio-economic consequences; and in the short to medium-term, achieving sustainable and inclusive growth which facilitates the green transition and the digital transformation. Further information on the package can be found on the detailed Q&A and the succinct factsheet

 

European Parliament briefing

On 20 May, the European Parliament services published a Briefing on the “transformation” of the European Stability Mechanism to support member states with the COVID-19 crisis (Pandemic Crisis Support).
 

Orgalim welcomes the French-German initiative for European recovery

On 18 May, France and Germany announced an initiative for the European recovery from the coronavirus crisis. Orgalim welcomes the leadership and the proposal of the two states to support Europe’s economy in overcoming the crisis. The recovery package should be linked to the twin priorities of digital and climate transition. If the right choices are made now, this crisis can provide an opportunity to accelerate Europe’s transformation and reinforce its global competitive position. Read our views for the way forward here.

 

International Trade

On 19 May, Eurostat published a set of statistics on the COVID-19 impact on EU exports and imports with its main trade partners. 

 

Research and Innovation

On 19 May, the Commission launched a new call within Horizon 2020 aiming to mobilise €122 million for research on the coronavirus. The new call for expressions of interest contributes to the Commission's €1.4 billion pledge to the Coronavirus Global Response initiative.

 

SURE instrument

On 19 May, the Council gave its final agreement to the Regulation establishing the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE). Financial support to Member States under SURE will become available once all Member States have voluntarily committed and signed their guarantee agreements with the Commission. SURE is a temporary scheme which can provide up to €100 billion of loans under favourable terms to Member States. The instrument enables them to request EU financial support to help finance the sudden and severe increases of national public expenditure, as from 1 February 2020, related to national short-time work schemes and similar measures, including for self-employed persons, or to some health-related measures, in particular at the work place in response to the crisis. 

 

European Parliament analysis 

On 19 May, the European Parliament services published an update of the measures taken by the EU or the Euro Area to fight the COVID-19 crisis.
 

Recovery Plan: French German Initiative 

On 18 May, France and Germany published a common proposal for the EU Recovery Plan consisting of a health strategy, a Recovery Fund granted with €500 billion which could be borrowed by the Commission on financial markets, the acceleration of the digital and green transitions, the enhancement of the European economy, and industry resilience and sovereignty, notably with a new impetus for the EU Internal Market, including a crisis mechanism for the Schengen Area and the acceleration of the legislative programme to complete it in the digital, energy and capital markets areas. This initiative was welcomed by the Commission President von der Leyen in a statement

 

European Parliament Briefing Note

On 18 May, the European Parliament services published a Briefing note on the role of the “European Semester” in steering the economic recovery. The briefing presents an overview on how this framework could provide a useful tool to coordinate national and EU policies, in view of the medium and long term objectives related to sustainable and inclusive growth

 

EU Council Meeting of the Industry and Internal Market Ministers

On 15 May, the Council met via videoconference to provide input to the Commission for the finalisation of the upcoming EU Recovery Plan, focusing on a) restoring a fully functioning single market, b) achieving the quick recovery of those European industrial sectors most hardly hit by the COVID-19 pandemic, and c) ensuring the strategic autonomy of the EU in critical industrial sectors, such as pharmaceuticals and telecommunications. The ministers took note of the Commission's preliminary analysis of 14 industrial ecosystems, and supported the idea of channeling investment into the fields presenting the greatest potential for innovation, growth and job creation. 

These eco-systems, as pointed out by Commissioner Breton, cover value chains from the smallest start-ups and SMEs to the largest companies, from academia to research, from service providers to suppliers. For each of them, a thorough assessment of their needs is carried out, looking at key economic indicators, establishing a “health bulletin” per ecosystem, and identifying their repair and investment needs. At the end of the videoconference, the Croatian presidency issued a press release.

 

European Investment Bank

On 15 May, the European Investment Bank approved a total of €3.4 billion of new financing to support companies most affected by the COVID-19 pandemic and priority public health projects, alongside energy, transport, water and education projects, of which 

  • COVID-19 business resilience and public health (€880 million) 
  • Artificial intelligence, corporate innovation and business investment (€1.2 billion)
  • Renewable energy and sustainable transport
  • Enhancing education opportunities

 

European Parliament: resolution on the recovery plan 

On 15 May, the European Parliament adopted in plenary (505 votes in favour, 119 against and 69 abstentions) a Resolution calling for a €2,000 billion recovery package to rebuild the European economy after the COVID-19 crisis to be financed “through the issuance of long-dated recovery bonds” and be “disbursed through loans and, mostly, through grants, direct payments for investment, and equity.” The recovery plan should be on top of the next Multiannual Financial Framework (MFF) and not to the detriment of existing and upcoming EU programmes. MEPs insist that the recovery plan should focus on priorities under the Green Deal and the digital agenda and be financed by the introduction of a basket of new “own resources” so as to prevent a further increase of member states’ direct contributions to the EU budget. 

 

European Parliament 

On 15 May, the European Parliament services published a new Briefing on “What Think Tanks are Thinking”, related to ideas developed by think tanks on the COVID-19 crisis and beyond.

 

Research  

  • On 14 May, the European Commission launched a new European Research Area ERA corona platform. The platform is a one-stop- shop providing information, dedicated support and real-time updates on funding opportunities for coronavirus related research and innovation, both EU and national. It also provides links to tailored Frequently Asked Questions (FAQs) for calls and grants affected by the coronavirus.

  • On 14 May, the European Institute of Innovation and Technology (EIT) launched the EIT Crisis Response Initiative supporting innovative solutions for social and economic recovery, with a budget of €60 million. Through this initiative, the EIT makes available €60 million in additional funding to help innovators generate high-impact solutions that address the unprecedented challenges presented by the crisis. 

 

European Central Bank

On 14 May, the European Central Bank published an update on economic and monetary developments.

 

Eurostat publication

On 14 May, the European Statistical Office published a report prepared with its partners from the Committee for the Coordination of Statistical Activities (CCSA), a group of 36 national and international statistical organisations. The report ‘How COVID-19 is changing the world: a statistical perspective’ provides an overview of some of the latest information available on how COVID-19 is affecting different aspects of public and private life, from economic and environmental fluctuations to changes that affect individuals in terms of income, education and employment.

 

Towards the EU Recovery Plan

On 13 May, the President of the European Commission Ms von der Leyen announced in a speech to the European Parliament the outline of the EU Recovery Plan. It will consist of two parts: the Multiannual Financial Framework (MFF) and on top a recovery instrument which the Commission will be allowed to borrow from capital markets with the guarantee of the Member States, and which will be channelled through EU programmes. 

The money will be spent across three pillars:

  • Supporting Member States to recover and repair via a new Recovery and Resilience tool created to fund key public investment and reforms aligned with the EU’s priorities of a twin transition to a climate-neutral and a digitalised and resilient Europe. It will be available to all Member States and focused on those parts of the EU that have been most affected and where resilience needs are the greatest.
  • Kick-starting the economy and helping private investment to get moving again by strengthening the InvestEU instrument, and creating new Strategic Investment Facility (to invest in key value chains crucial for Europe’s future resilience and strategic autonomy) and a new Solvency Instrument (to help match the recapitalisation needs of healthy companies who have been put at risk as a result of the lockdown).
  • Learning the most immediate lessons of the crisis, by strengthening programmes that have proven their value in the crisis, such as RescEU or Horizon Europe, by creating a dedicated Health Programme and by reinforcing the EU instruments for Neighbourhood, Development and International Cooperation and for pre-accession assistance to candidate Member States.

 

Coordinated re-opening of internal borders

On 13 May, the Commission presented a package of guidelines and recommendations to coordinate and support Member States gradually lift travel restrictions and allow tourism businesses to reopen while respecting health precautions. The Commission's Tourism and Transport package includes:

  • An overall strategy towards recovery in 2020 and beyond;
  • A framework to support the gradual re-establishment of transport whilst ensuring the safety of passengers and personnel;
  • A recommendation which aims to make travel vouchers an attractive alternative to cash reimbursement for consumers;
  • Criteria for restoring tourism activities safely and gradually and for developing health protocols for hospitality establishments such as hotels;
  • Guidelines for ensuring cross-border interoperability of tracing apps (so that citizens can be warned of a potential infection with coronavirus also when they travel in the EU, with such criteria as voluntary, transparent, temporary, cybersecure, using anonymised data, rely on Bluetooth technology and be inter-operable across borders as well as across operating systems, in line with the principles set out in the EU toolbox and the Commission guidance on data protection).

Of most direct interest for the whole economy and the technology industries, in particular, is the common approach to restoring free movement and lifting restrictions at EU internal borders in a gradual and coordinated way. This document aims to give people the ability, confidence and safety to travel again. 

Member States, as they manage to reduce the circulation of the virus, are invited to replace blanket restrictions to free movement by more targeted measures, in a phased and coordinated approach that starts by lifting restrictions between areas or Member States with sufficiently similar epidemiological situations. The approach is meant to be flexible, including the possibility to reintroduce certain measures if the epidemiological situation requires. Member States should act on the basis of the following 3 criteria:

  • epidemiological, notably focusing on areas where situation is improving, based on guidance by the European Centre for Disease Prevention and Control (ECDC) and using the regional map developed by the ECDC
  • the ability to apply containment measures throughout the whole journey, including at border crossings, and including additional safeguards and measures where physical distancing may be difficult to ensure
  • economic and social considerations, initially prioritising cross-border movement in key areas of activity and including personal reasons

The Commission also insists on the principle of non-discrimination: when a Member State decides to allow travel into its territory or to specific regions and areas within its territory, it should do so by allowing travel from all areas, regions or countries in the EU with similar epidemiological conditions. Likewise, any restrictions must be lifted without discrimination, to all EU citizens and to all residents of that Member State regardless of their nationality, and should be applied to all parts of the Union in a similar epidemiological situation.
 

Benefits of the EU Internal Market

On 12 May, the European Parliament’s Research Service (EPRS) published a study outlining the economic benefits of EU common action and what the costs of dismantling the EU single market would be (between 3.0 and 8.7% of its GDP) if the current coronavirus crisis and its aftermath were to stall or reverse the process of European integration.

The study first looks at the current cost-of non-Europe and European added value, with an estimation of the potential losses generated by dismantling the European Union. Then, specific policy areas are examined such as the digital single market, the monetary union, the health, education, social and cohesion policy, the climate action, the energy market, research and innovation, the protection of individual freedoms, security and justice, and the international cooperation and development.

 

Free circulation within the European Union

On 12 May, the European Parliament services published a briefing describing and analysing measures undertaken by the European Commission on mobility and transport to keep free circulation of goods, services and workers despite the Member states closing of the internal EU borders. A link to the main texts is provided, such as 

  • Communication on temporary restriction on non-essential travel to the EU
  • Guidelines for border management measures to protect health and ensure the availability of goods and essential services
  • Interpretative guidelines on EU passenger rights regulations in the context of the developing COVID-19 pandemic
  • Communication on the implementation of 'green lanes' to expedite traffic under the guidelines for border management measures to protect health and ensure the availability of goods and essential services
  • Guidance on the implementation of the temporary restriction on non-essential travel to the EU, on the facilitation of transit arrangements for the repatriation of EU citizens, and on the effects on visa policy
  • Guidelines concerning the exercise of the free movement of workers during the COVID-19 outbreak

 

Administrative burden

On 11 May, the European Commission launched the high-level expert group “Fit for Future Platform”, tasked with helping the Commission simplify existing EU laws and reduce administrative burden and ensure that EU legislation remains future-proof notably with regards to digitalisation.

Part of the Platform will consist of a stakeholder group representing business, in particular small and medium-sized enterprises, social partners and civil society organisations having direct experience in the application of Union legislation. A call for applications to select experts was launched at the same time with a deadline set at 19 June 2020. The Fit for Future Platform succeeds the REFIT platform, building on its experiences from 2015 to 2019.

 

R&D Programmes 

On 11 May, the European Parliament’s General Secretariat published a note summarising the activities undertaken under the EU research and innovation programmes in the fight against coronavirus: €1 billion were mobilised under Horizon 2020, and the Commission has launched several special actions to tackle the COVID-19 pandemic in Europe and abroad. 

 

Preliminary assessments confirming the eligibility of all the Euro Area Member States for the proposed Pandemic Crisis Support to be provided by the European Stability Mechanism

On 6 May, in view of the Eurogroup meeting, the Commission Services reported on the basis of a preliminary assessment that, whereas the economic and financial impact of the COVID-19 pandemic entails risks for the financial stability of the euro area, the economic situation in euro area Member States is considered to be fundamentally sound, also in view of the following specific considerations: 

  • Government debts are expected to remain sustainable in all euro area Member States over the time horizon of the debt sustainability analysis (i.e. ten years)
  • Whilst financing needs of all euro area Member States are expected to rise substantially compared to previous funding plans, all Member States are expected to retain market access at reasonable terms
  • No Euro Area Member State is in an excessive deficit procedure
  • No Euro Area Member State is in an excessive imbalance procedure
  • External positions of Euro Area Member States are sustainable given their values and composition as well as the institutional setup of the Euro
  • The European Central Bank has concluded that there is no evidence of systemic solvency problems in the euro area banking systems

More information is available here
 

Commission proposes postponement of taxation rules due to coronavirus crisis

On 8 May, the Commission decided to postpone the entry into force of two EU taxation measures to take account of the difficulties that businesses and Member States are facing at the moment with the coronavirus crisis. First, the Commission proposed to postpone the entry into application of the VAT e-commerce package by 6 months. These rules will apply as of 1 July 2021 instead of 1 January 2021, giving Member States and businesses more time to prepare for the new VAT e-commerce rules. Second, the Commission decided to propose deferring certain deadlines for filing and exchanging information under the Directive on Administrative Cooperation (DAC). Based on the proposed changes, Member States will have three additional months to exchange information on financial accounts of which the beneficiaries are tax residents in another Member State. Similarly, Member States will have three additional months to exchange information on certain cross-border tax planning arrangements.

 

Draft Programme of the German, Portuguese and Slovenian Trio Presidencies 

The three upcoming Presidencies of the EU Council following Croatia (Germany, Portugal and Slovenia) are finalising the preparation of their “trio programme”. A leaked document shows a strong focus on the EU response to the COVID-19 outbreak and has several placeholders in the section on the EU Recovery Plan (MFF and its link with the Recovery Fund). The Trio calls for “taking forward the Green transition and the Digital transformation, ensuring the strategic autonomy of the EU through a dynamic industrial policy, supporting SMEs and start-ups, screening foreign direct investment and building more resilient infrastructure”.  
 
Among other things, the three upcoming Presidencies: 

  • Call for strengthening the EU digital sovereignty, especially in sectors of strategic importance and in the area of key enabling digital technologies and data infrastructures, and insist that Europe can shape the digital transformation. 
  • Underline that “the Digital transformation presents opportunities but also challenges as regards citizens' rights and freedoms” and call for making sure that “fundamental rights and common values are respected in the process of digitalisation”.
  • Welcome the White Paper on AI and underline the need to protect our societies from cyber threats. They also support the forthcoming review of the NIS Directive and say that they will step up efforts at European level for a mandatory minimum level of IT security for devices that are connected to the internet.
  • Confirm that the EU's long-term strategy for sustainable growth also requires an ambitious EU industrial policy strategy.
  • Will build on the Commission’s EU Industrial Strategy and propose next steps for implementation and monitoring. 
  • Will promote the modernisation of the European competition framework also against the backdrop of the digital transformation. They also intend to enhance the efficiency, innovation orientation and sustainability of public procurement.
  • Intend to further promote fair taxation in an ever more digitalising economy - in particular with respect to an effective minimum taxation - and advance the initiatives set out in the Action Plan to fight tax evasion. 
  • Mention the need to focus on the of use of flexible forms of work such as teleworking, including through digital tools, in the post COVID-19 context. 

 

Free circulation 

On 8 May, the European Commission proposed in a new Communication to Schengen Member States and Schengen Associated States to extend the temporary restriction on non-essential travel to the EU for another 30 days, until 15 June, insisting that the lifting of travel restrictions should be phased, starting with internal border controls, which should start being lifted gradually and in a coordinated manner before restrictions at the external borders can be relaxed in a second stage.

 

State Aid

On 8 May, the European Commission adopted a second amendment to extend the scope of the State aid Temporary Framework adopted on 19 March to enable Member States to support the economy in the context of the coronavirus outbreak. Based on these horizontal rules and in close cooperation with Member States, the Commission has already approved an estimated €1.9 trillion in State aid to the EU economy – to provide liquidity for companies, support jobs, enable research and development and ensure the supply of products to fight the coronavirus outbreak. This second amendment complements the types of measures already covered by the Temporary Framework and existing State aid rules, by setting out criteria based on which Member States can provide recapitalisations and subordinated debt to companies in need, while protecting the level playing field in the EU.