What can the Govt do now to unlock the economy?

Opinion: critical supports have been provided to businesses during the pandemic, but other measures are required to re-open the economy

Covid-19 has devastated the economy, businesses and individuals. At the end of January 2021, the Covid-19 adjusted measure of employment was 1.827 million. This compares with an employment level of 2.361 million in Q4 2019, which is a loss of 534,000 jobs or 22.6%. In early 2021, there were 473,000 people receiving the pandemic unemployment payment (PUP), 273.000 on the employment wage subsidy scheme and 189,000 on the usual unemployment live register.

But not all sectors have been damaged by Covid. Supermarkets, pharmaceutical companies, suppliers of medical equipment, off-licences, online operations and technology companies are performing well. On the other hand, aviation, hospitality, tourism, entertainment, sport, construction and personal services have been decimated.

Over 22,000 enterprises registered for the Covid grant scheme, of which 24% are bars, 23% are personal services (hairdressers etc), 14% are specialist retailers (florists, toys etc), 13% are restaurants and coffee shops and 9% are hotels and other accommodation providers. Other sectors account for 18%.

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From RTÉ Radio 1's This Week, RTÉ Industry & Employment Correspondent Ingrid Miley discusses the latest figures on how many are claiming the Pandemic Unemployment Payment

What the Government has done so far?

A substantial array of supports has been given to businesses to cope with the effects of Covid. In Ireland, these supports include commercial rates waivers, loans, grants, wage subsidies, warehousing of tax liabilities and supports to develop online trading capability. The Path Ahead document published this week refers to a total of €9.9 billion, excluding wage subsidies, in direct business supports to date. However, most of this is loan support and tax deferrals as opposed to cash grants.

Why support business in the pandemic?

The Department of Finance believes that generalised supports may hinder the transition from declining to growing sectors. The Path Ahead notes that supports will be curtailed and targeted once the economy reopens. This is desirable, subject to the strong caveat of "when the economy reopens". The Covid- related supports should end with reopening and be replaced by more appropriate growth and development oriented measures. It is likely that many existing firms will not survive in the new non-Covid economy.

The supports, which have been financed by borrowing, are intended to prevent a short- term liquidity problem becoming a permanent closure. Allowing many businesses to collapse would cause lasting economic damage because existing firms have certain "firm specific human and intangible capital" that would disappear on permanent closure. It also has to be acknowledged that these firms and sectors (such as hospitality and live events) were closed by government order.

From RTÉ Six One News, retailers seek further supports as lockdown continues

'Total lockdown is not feasible'

We now know that Covid-19 is a very contagious virus. Left to itself, it will infect large numbers of the population. To minimise the incidence of the virus, the government introduced a range of measures which reduce contact between people and have advised on hygiene measures such as the wearing of face masks.

A very efficient approach to prevent the spreaad of the virus would be to have a complete isolation of each person from another. This would mean no leaving home, the isolation of individuals from each other within a household and no going to the supermarket or work.

But such total lockdown is not feasible. People need to go to work to produce and distribute food. Flood and storm damage to utilities have to be repaired. We need a functioning police force to prevent criminals taking advantage of the deserted streets. Many people need to receive care from others. Lockdown also has negative effects on mental health, physical health and economic loss/ability to finance society.

Each lockdown scenario involves decisions about which activities are allowed. Ideally, these decisions would be evidence- based and reflect cost/benefit considerations and would be well explained. The definition of "essential" leaves scope for disagreement and for different burdens on specific activities. Choices also reflect political realities.

From RTÉ Radio 1's Today with Claire Byrne, small business owners on how the continued lockdown is affecting them

What can the Government do now to unlock the economy?

A more rapid roll out of the vaccination programme would facilitate the unlocking of the economy. This requires an increased supply of the vaccine and an improved delivery capacity. We can always improve our delivery capacity, but sourcing additional supply is more problematic. Better policing and implementation of citizen and non-business compliance with Covid regulations would reduce this as a source of infections and provide scope for opening of business.

We should also devote more attention to communicating the message on appropriate behaviour. A more evidence based approach to the closing and opening of sectors would contribute to public and business acceptance.

A world class test and trace capability would permit a more targeted approach to dealing with outbreaks more speedily and without the need for large lockdowns. There should be a more quantified set of indicators to determine open-up possibilities as opposed to calendar dates. Presumably, the published calendar dates reflect some unpublished assumptions on the disease trajectory. Current restrictions are to operate until 5 April.

From RTÉ Radio 1's Morning Ireland, RTÉ Political Correspondent Mícheál Lehane and Health Correspondent Fergal Bowers on the Government's latest Living with Covid plan - and what it will mean for Ireland over the coming months

The Path Ahead states that the ongoing review of the restrictions will be based on the following four (broadly non-quantified except for mention of the reproduction rate) issues:

· Disease prevalence

· Hospital and critical care occupancy

· Ongoing progress with vaccinations

· Emerging information on variants of concern.

The various business supports have been extended beyond their initial expected termination dates. These measures make sense as a short term response to Covid lockdowns, but a different approach will be appropriate when the economy has resumed normal operating conditions. Supports should be available for the duration of the relevant lockdown period. A critical future issue will be the management of business debt accumulated during Covid.

The views expressed here are those of the author and do not represent or reflect the views of RTÉ

What can the Govt do now to unlock the economy?

What the Government has done so far?

Why support business in the pandemic?

'Total lockdown is not feasible'

What can the Government do now to unlock the economy?

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Anthony Foley