Swiss government readies bigger coronavirus aid package

0
164

The Swiss government on Wednesday pledged to expand its coronavirus aid package while warning that there is a limit to how much it can help struggling businesses without damaging its own finances.

The Federal Council plans to top up the CHF 42 billion package in the coming days with more liquidity for cash-strapped companies. It is also preparing support for those not included in the current plan, such as start-ups and the self-employed.

Vice President Guy Parmelin, who is also the economics minister, cautioned that the government can’t cover all claims for lost income, saying that would endanger its financial stability and the country’s economic appeal.

Switzerland is already looking to double its holdings of short-term debt and step up bond sales to cushion the economic consequences of the pandemic.

Exit scenarios 

The council is also working on a strategy to reboot the economy after restrictions on social contact are eased. No time frame was given, although Parmelin said “small, strictly controlled relaxations” may be allowed for certain sectors.

In one indication of how slow that process may be, the government said it will take two to three weeks just for trains to get back on schedule.

“It would be counterproductive if we let our guard down and then have to take harder measures later,” Parmelin said. “Everyone would regret it.”

Switzerland’s COVID-19 support package consists mainly of wage subsidies for furloughed workers and CHF 20 billion in guarantees for emergency loans. Banks have already handed out more than half of that to roughly 54,000 companies.

Demand for help to cover salaries has also been overwhelming, with about 86,000 companies seeking benefits for more than 1 million employees, or about 20 percent of the workforce.

Credit Suisse estimates the cost so far of federal measures to safeguard earnings at around CHF 4.6 billion for every month the crisis drags on. However, the government probably won’t have to breach its debt brake thanks in part to its budget surpluses in recent years, the bank said.

The Swiss constitution requires a balance between revenue and expenses over the economic cycle, though the government may run annual deficits.

The coronavirus lockdown is taking a heavy toll on Swiss industry, data showed on Wednesday. The Swiss Purchasing Managers’ Index for March fell to 43.7 points, its lowest since July 2009. The index is compiled by Credit Suisse and the procure.ch association.

A measure below 50 points indicates a contraction in manufacturing, which accounts for about a fifth of Swiss output. The reading for the services sector plunged to 28.1 points, reflecting that most shops and restaurants are closed to help stop the virus.

Switzerland has reported 17,139 cases of COVID-19, with 378 deaths as of Wednesday.

WATCH MORE

Exoskeleton takes its next step, despite the crisis
As start-ups try to negotiate their way through this tumultuous economy, one based in Lausanne is on solid footing. The medtech start-up TWIICE, which makes lower-limb exoskeletons that allow paraplegics to walk again, says it has enough funding for now. But co-founder Tristan Vouga worries for his fellow start-ups. While the government has put together a credit program worth CHF 154 million for start-ups, Vouga says loans carry their own risk. “You have to pay that money back, and you can only do so if during these times you are able to produce value….And if you’re locked down you cannot produce value.”

Switzerland to outline next stages in lockdown exit
The Swiss government is set to announce the next stages of its plan to slowly unwind its coronavirus restrictions and rekindle its beleaguered economy. The Federal Council meets Wednesday to map out a lockdown exit strategy for everything from sports and cultural activities to tourism, restaurants, and big events such as conferences. Talks on when to reopen Swiss borders and ease bans on gatherings of more than five people are also on the agenda. “What awaits us next week is an extremely important menu to face the next stages,” Interior Minister Alain Berset said last Wednesday. Swiss officials are also expected to announce an aid package worth about CHF 1.5 billion for Lufthansa unit Swiss and CHF 500 million for other companies in the industry, Tages-Anzeiger reported on Tuesday. The package, promised several weeks ago, is said to consist mainly of state guarantees for bank loans. The government has already scheduled three phases of the transition to normality, or at least a semblance of it. The first began this week with the reopening of a few businesses, including hairdressers, garden centers, and hardware stores. If the infection remains under control, children can go back to school and more shops will reopen on May 11. Institutions of higher education, museums, zoos, and libraries will have to wait until June 8. What happens next is the big question. Officials are weighing risk factors, such as the increase in social contact and the ability of businesses to protect people, against the economic benefits. After six weeks in limbo, Switzerland is headed for its deepest downturn since 1975 in the aftermath of the oil price shock, according to the State Secretariat for Economic Affairs, or SECO. It is forecasting a slump of 6.7 percent for the year, followed by a gradual rebound in 2021. The jobless rate shot up in April even as the government began helping companies cover the costs of keeping workers on their payrolls to avoid mass layoffs. Unemployment will probably reach 3.4 percent by the end of April, up from 2.9 percent in March, said Boris Zürcher, head of SECO’s labor department. Governments across the globe are rolling out rescue packages for their ailing airlines as the travel slump drags on. The International Air Transport Association has warned that the pandemic could bankrupt half the world’s airlines. Lufthansa is pressing Angela Merkel’s coalition for a multibillion-euro bailout that doesn’t involve ceding control to the German government. European rival Air France-KLM last week received pledges of 11 billion euros in loans and guarantees from the French and Dutch governments. Eric Jakob of SECO warned on Monday that residents of Switzerland shouldn’t plan to travel internationally before 2021. Jakob said that even if air travel starts up again, it would remain uncertain for a long time.

Lion’s Den entrepreneur sees opportunity in crisis for start-ups
Start-ups have been among the hardest-hit companies as coronavirus shuts down economies. A lack of liquidity was one issue, with hesitant investors adding to the troubles. But as we return to work, tech entrepreneur Bettina Hein says start-ups are well positioned to take advantage of lower valuations and cheaper talent. European start-ups could even gain an edge on Silicon Valley, where the handling of the crisis has left many companies in “chaos,” she says.

Outpatient medical practices to reopen
Outpatient medical practices open today as part of the Federal Council decision to ease the lockdown around Switzerland. According to Yannick Hallemans, osteopath at BodyLab in Zurich, his business lost almost 95 percent of revenue the past six weeks since the practice was available only for patients with severe conditions.

Switzerland relaxes coronavirus lockdown
Day 1 of Switzerland easing its coronavirus #ockdown. We’re on the ground to take a first look at shops reopening.

Contact tracing apps pose ethical conundrum
Ahead of the release of a contact tracing app to fight the coronavirus, the National Advisory Commission on Biomedical Ethics has published recommendations on how to use the tool ethically in Switzerland. This digital access to the individual sphere poses particular risks to privacy and personal liberty, says Andrea Büchler, president of the commission. She also explains why Switzerland’s approach to the app is more ethical than the approach advocated by the pan-European PEPP-PT consortium.

Swissport axes 10,000 jobs as pandemic devastates aviation industry
Swissport, the aviation services company owned by the struggling Chinese conglomerate HNA Group, has eliminated 10,000 jobs in the months since the coronavirus began laying waste to the aviation industry. The layoffs amount to about 15 percent of the company’s global workforce. About 55 percent were in the United States and Canada, and 35 percent were in Europe, the Middle East and Africa, said the company. Another 40,000 employees have been furloughed or are on unpaid leave, giving the company an active workforce of just 15,000. Swissport, which handles cargo and ground services, has taken a hit as the pandemic closes down airports and pushes airlines towards bankruptcy. The collapse of Virgin Australia this week served as another blow, prompting Swissport to seek government aid for its operation in Australia. Swissport spokesman Christoph Meier said Virgin Australia serves as a “blueprint of what can be set in motion by uncontained collapses of key industry players.” Earlier this year HNA, which owns a 20 percent stake in the Australian airline, became one of the first corporate victims of the coronavirus when it was taken over by the provincial government of Hainan, where the company is based. HNA was already struggling after amassing a huge debt load during a global buying spree. Swissport has managed to keep layoffs in Switzerland “very low” with a double-digit figure in Zurich, where cuts were also made this week, Meier said. About 80 percent of staff in the head office are working reduced hours under Switzerland’s short-time work program, which pays companies to keep employees on the payroll during tough times. “Those concerned had started recently and were still on temporary employment,” Meier said in an email Friday. “Instead of being made permanent, they were let go due to the circumstances.” By contrast, Swissport says business has picked up at airports that focus on freight, including Basel’s EuroAirport and Liège Airport in Belgium.

Big tech bestows superpowers on coronavirus researchers
IBM recently teamed up with Google, Amazon, Microsoft, MIT, and the White House Office of Science and Technology Policy to create a supercomputing consortium to support COVID-19 research efforts. Using this ultra-fast computing technology together with several AI-powered tools, the company hopes to contribute to a more rapid response to the virus. Alessandro Curioni, IBM’s head of research in Europe, says the initiative is a hit with researchers and hints that there may be a role for Switzerland.

Swiss-Brazilian woman lends a hand in the favelas—and helps establish a movement
Swiss-Brazilian Gabriela de Paula was visiting her mother in São Paulo when the coronavirus lockdown started, but instead of returning home to Switzerland, she decided to stay and lend a helping hand in the impoverished favelas by distributing care packages with food and hygiene products. Her efforts became one of the founding pillars of the new Save2020.org movement, an initiative that aims to highlight good deeds during the crisis and that CNNMoney Switzerland is supporting.

Beards and bushy hair: Swiss hairdressers are ready for you
Hairdressers in Switzerland have their work cut out for them next week. Not only are their snipping skills in high demand from customers with bushy beards and scraggly hair after six weeks of lockdown-induced neglect. They also have to figure out how to perform what is a very personal service without violating the country’s limits on contact. “Since Thursday, our phones are ringing like crazy,” said Michel Fuchs of Fuchs Hairteam in Lucerne. He said the salon will be working at 70 percent capacity and is requiring staff to wear goggles for some services and take their breaks outside. Coiffeur Hair Sun in Basel is also booked out next week. Even so, owner Walter Kammermann aims to keep at least four meters between the 14 seats. Hairdressers are among a select group of stores, including florists and hardware stores, that have been given the green light by the Swiss government to reopen on Monday. It’s the first step in the government’s plan to gradually return Switzerland to normality in the coming months. Haircare at a distance Don’t expect a regular hair appointment. Salons are taking precautionary measures in the lead-up to Monday. The Swiss Hairdresser Association, coiffureSUISSE, has published a list of providers to help salons in sourcing protective products such as masks, disinfectant, gloves, and safety goggles. Fuchs Hairteam in Lucerne will require both workers and clients to wear masks and will use only 12 of its 18 seats. In Basel, Hinz & Kunst has ordered 600 masks as well as gloves. Gloria Hinz, the wife of the owner, is worried about running out of products because of delays in deliveries. Although many customers are desperate for a trim, others are hesitant. Christian Moser, who runs his own salon in Bern, says people are asking how they will be protected and whether it will be safe. Moser spent CHF 1,000 to stock up on protective equipment this month.

Company developing Switzerland’s contact tracing app faces tight deadline
Ubique, the company developing Switzerland’s contact tracing app, faces a May 11 deadline to deploy the tool, part of the government’s strategy for keeping the coronavirus under control as the lockdown is gradually loosened. CEO Mathias Wellig shares findings from the first field tests and walks CNNMoney Switzerland’s Tanya König through features designed to protect personal data. The app uses a decentralized approach to data storage that was pioneered by technical universities ETH and EPFL and which has won plaudits from scientists around the world.

Demand for mobility data soars during lockdown, Teralytics says
Business is booming, says Teralytics CEO Alastair MacLead. In normal times, the Swiss start-up crunches data on people’s mobility to help the transportation industry match services and schedules with travel plans. With the onset of coronavirus, however, the company has gone from facilitating journeys to helping the world stay at home, adding the likes of the Robert Koch Institute and Johns Hopkins University to its clientele.

Swiss army to distribute millions of masks
Switzerland’s army will distribute 1 million masks to leading retailers every day for two weeks starting Monday, the government said, even as it insisted people don’t need to wear them. Daniel Koch, director of the division of infectious diseases, said making masks mandatory could give people a false sense of security and they might not follow rules on keeping their distance and washing hands. Still, some professions and communities may need them as the country starts to relax its coronavirus restrictions next week, the government said. Interior Minister Alain Berset said the decision was based on recommendations by the European Centre for Disease Prevention and Control. The EU agency says using masks may reduce the spread of infection but should be considered a complementary measure—not a replacement for established preventive practices like physical distancing. The public health office reported 28,268 positive tests for COVID-19 as of Wednesday, up 200 from Tuesday’s count. The death toll rose to 1,217. Switzerland’s infection rate peaked at the end of March, when new positive tests ranged from 1,300 to 1,500 a day. No herd immunity The government plans to resume tracking cases of the infection as part of its post-lockdown strategy. Some cantons are already conducting blood tests to determine the prevalence of the virus. Berset said the first results show a level well below 10 percent. “We can’t count on collective immunity,” he said, referring to what happens when enough people are immune to a disease for the chains of transmission to be broken. The World Health Organization has warned there is no evidence to suggest that the presence of antibodies in blood can determine whether someone has immunity to the coronavirus. COVID-19 aid for start-ups Also Wednesday, the government announced a CHF 154 emergency loan program for start-ups. The confederation will guarantee 65 percent of a bank loan, with the cantons backing the remaining 35 percent. The program is similar to the government’s aid package for small businesses, under which 109,000 firms have received state-backed loans amounting to CHF 17 billion as of Wednesday, Finance Minister Ueli Maurer said. He said he expects the federal deficit to run between CHF 30 and 40 billion this year depending on the unemployment rate. The government has added hundreds of thousands of workers to its payroll under its short-time program of wage subsidies since mid-March.

Coming soon in Switzerland—a contact tracing app to combat COVID-19
Smartphone users in Switzerland may soon be able to download an app to alert them if they are exposed to people infected with coronavirus, a development that may hasten the country’s return to normality. The Federal Office of Public Health is planning to roll out the contact tracing system by May 11, spokeswoman Sabina Helfer said in an email. “We are in the process of clarifying the feasibility and are carrying out various tests.” Many Asian governments have managed to limit their death tolls and avoid nationwide lockdowns with help from digital tracking. Contact-tracing apps try to log instances where a person is close to another smartphone owner. If a user later believes to have become infected and records the fact, others will receive an alert. Such an app is a key part of Switzerland’s lockdown exit strategy but development has been dogged by privacy concerns. Another worry is whether enough people will install the app on their smartphones. Experts say that about 60 percent of the population would have to use the app for it to make a contribution to containing the virus. In a survey commissioned by the Swiss Broadcasting Corporation this month, two out of three respondents said they would be willing to use a smartphone app to help stem the spread of COVID-19. Switzerland recently backed out of a European digital tracking plan—PEPP-PT—over fears that it may violate the country’s tough data protection laws. While the government has said the app would be voluntary and anonymous, the main issue is how to store the data. Instead the government is working on an approach that avoids centralized stores of data, which scientists say could be used for invasive, even nefarious, purposes. Swiss authorities on data projection, cyber security, and ethics all agree that the decentralized DP-3T protocol is safest, Helfer said. It will work with an opt-in that Apple and Google are jointly developing and which relies on wireless Bluetooth signals to detect contacts. Pioneered in Switzerland, the DP-3T protocol was endorsed this week by 300 scientists from more than 25 countries. „We are concerned that some ’solutions‘ to the crisis may, via mission creep, result in systems which would allow unprecedented surveillance of society at large,” they said in an open letter published Monday.