US Senate reaches agreement to a $2 trillion fiscal stimulus package

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As expected, the US Senate reached agreement between the parties to a $2 trillion fiscal stimulus package yesterday, which gave the markets a big boost. Democrats allowed substantial funds to be available for business through a $500bn fund for industries, cities and states, with a $367bn loan programme for small business. They also accepted the President’s idea of sending $1200 to most Americans and $500 to most children. In return the Republicans accepted a substantial increase in unemployment insurance, granting $600 a week more for four months to those laid off and an additional £150bn for state and local purposes. The money for industry includes $50bn for passenger airlines and $8bn for freight airlines.

This vast sum is 10% of GDP, but it is not out of line with the magnitude of the hit the US economy is now experiencing given the widespread closures, soon to be followed by layoffs of employees. The markets were relieved that it looks likely to pass. The Senate is in session and is planning a vote today which should confirm the bipartisan support. The House of Representatives is not in session and hopes to pass it urgently by unanimity. If there are individual Representatives who object, the House will need to be recalled for a day’s debate, with arrangements to allow some social distancing and a reduced Chamber presence. It seems very likely this will now pass.

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