Government Support Policy for Fixed Costs of Businesses in Crisis

Zvi Eckstein, Sarit Menahem-Carmi and Sergei Sumkin

The current period (July 7, 2020), which is characterized by a surge in the numbers of hospitalized COVID-19 patients and severe cases reported, amid new restrictions on economic activity, requires policy makers to prepare for a second wave or similar scenarios. Just like the preparation of the healthcare system, which must include clear measures for dealing with a second crisis, similar preparation is necessary in the area of economic policy, including the necessary legal groundwork. The first outbreak, which started in March 2020, gave rise to economic policy measures which were designed within a short time frame, "on the go", in complicated circumstances and under public pressure, and might have not been the optimal steps to take at that point in time. Now, however, given the policy measures taken – which may have created some anticipation for their recurrence in case of a similar crisis – there is a need for an economic plan detailing government actions to be taken in case of another outbreak or a similar crisis, in order to alleviate uncertainty in the business sector regarding such a scenario. It is difficult to estimate the negative economic impact of uncertainty, but undoubtedly it impairs the ability of businesses to make economic decisions, thus hindering employment and the growth of the economy, since the hesitation of policy makers in deciding on the means and extent of government support is detrimental to the willingness of businesses to return to full activity, which in turn reduces the availability of employment.