showCASE 104 I CASE Highlights
Trade, Innovation, Productivity
Following the historic drop of oil prices in March, the OPEC and its allies finalised an agreement on what turned out to be the all-time record cut in oil production: by 9.7 million barrels per day or about 10% of global oil output. While the deal reached on April 12 resulted in an almost immediate rise of market prices, with Brent Crude trading at USD 31.82 on April 13 (up from USD 24.74 on April 1), the prospects of the energy market recovery have been overshadowed by the slump in demand induced by the persistence of the COVID-19-related lockdowns. As a result, on April 20, the US oil price benchmark - West Texas Intermediate (WTI) has dropped to a historic low of USD 14.19 per barrel. Similarly, alongside the tightening of quarantine restrictions in the US and the introduction of coronavirus-induced state‑of‑emergency in Russia, both Brent Crude and Urals prices approached their pre-agreement levels of USD 27.02 and USD 23.05 per barrel, respectively.
The persistent uncertainty and rather gloomy forecasts on the energy markets boost the attractiveness of technology and innovation sectors, which, as evidenced by the Atlantic Council's GeoTech Center global survey, have benefited from accelerated growth since the outbreak of COVID-19. As the pandemic has already stimulated innovations throughout a number of areas, including medicine, education, management, and intellectual property, the underlying technology is likely to retain its new importance and contribute to the post-COVID-19 recovery.
Labour Markets and Environment
The Polish Ministry of Family, Labour and Social Policy announced that due to the COVID-19 pandemic, the unemployment rate in Poland might reach 9‑10%, with 1.4 million unemployed registered by the end of 2020. According to the Ministry, the estimated unemployment rate at the beginning of March 2020 was approximately 5.5%, with around 920,000 unemployed. In order to respond to the challenges resulting from the possible rise of unemployment, the government has proposed a set of measures, including, among others, salary subsidies and loans for entrepreneurs (including micro businesses). The proposed aid package, however, has been criticised for not sufficiently covering gig economy and civil contract workers, who are associated with the main waves fuelling the unemployment registers.
Macroeconomics and Public Finance
In times of pandemic, the attention of decision‑makers is focused on costly fiscal instruments that directly support entrepreneurs (grants, loans, guarantees). In contrast, attention should also be paid to measures aimed to reduce the burden of public levies, e.g. by postponing deadlines for filing tax returns and postponing or exempting social security contributions. Indeed, the importance of ensuring financial liquidity of firms was underlined by OECD in a report published on April 15. Tax reliefs were in fact introduced by many EU Member States in March, for example by Germany and the Czech Republic, where not only deadlines for filing tax returns were postponed, but also the obligation to make advance payments was reduced. In Germany, the exemption from tax was even provided for in the case of the special hardship benefit of EUR 1,500 paid out to employees. Other solutions, such as favourable settlements of tax losses and quicker CIT refunds, were introduced by France. Slovakia, in addition to liquidity measures, has suspended tax audits of companies (apart from companies that show VAT refunds).
In Poland, many tax solutions already present in other countries have been deployed under the so‑called Anti-Crisis Shield 1 and 2, including far‑reaching decisions such as the suspension of tax audits. It is puzzling, however, that in these difficult times, Polish decision-makers do not reach for a simple and completely cost-free solution and do not allow entrepreneurs to use their own resources accumulated in VAT accounts (split accounts). With the withdrawal from this mechanism of Romania in February this year, Poland remains the only EU Member State to apply such a wide obligation to freeze money on VAT accounts as part of the split payment mechanism, which is particularly burdensome to private entrepreneurs. Releasing these funds within a short period of time would significantly improve the liquidity of entrepreneurs in Poland. With the current situation, it is difficult to precisely calculate the effects of this operation, but it can be assessed at around PLN 100 billion per year.