The impact of Covid-19 on the Dutch economy

Damage control

Jacobs indicates that there are three economic paths the government can follow to keep the economy on track. The most important one for both social and healthcare interest is getting the virus under control. This is also beneficial for the economy, since a large part of the problem is caused by the fact that people are no longer allowed to work (together). The sooner the disease is under control, the sooner everyone can get back to work, the smaller the damage to the economy, says Jacobs. In order to regain control as quickly as possible, spending restrictions in healthcare have been removed, a good measure according to Jacobs.

Support for the self-employed

The second path the government should consider relates to self-employed workers in distress. While self-employed workers generate less income, their costs often do not decrease. This group can be reimbursed from an governmental established wage fund. In addition, companies will be granted deferment of all taxes during the coming period. This will provide liquidity in the short term to get through this period.

Support from the financial sector

According to Jacobs, the third track is the most complicated. The government is trying to convince the financial sector to continue giving out loans. In a well-functioning economy not the government, but the banking sector is expected to deal with the consequences of the economic crisis by giving out bridge loans to healthy companies. But the banks are becoming cautious, since it is difficult to estimate which companies are healthy and which might fall during this period.

For now, the focus lies on the first track: controlling the virus. Jacobs does not comment on whether the measures taken are sufficient. He states that he is not a medic and can't interfere on the topic. However, he does point out that the financial measures taken by the government can reduce the gravity of a recession. According to Jacobs, these are very substantial measures that we have never seen before, especially since they were established in such a short period of time.