Stockbroker Goodbody is calling for the introduction of a state backed loan scheme to help struggling businesses cope with the aftermath of the shutdown of the economy to contain the spread of Covid-19.

In its latest economic health check, the group's chief economist Dermot O'Leary said the level of government support for business here had been much lower that elsewhere.

He warns that some businesses will inevitably remain closed for good and that the situation could be exacerbated unless targetted measures are introduced soon.

The report concludes that Ireland's plan for reopening the economy post-Covid 19 is significantly more cautious than the rest of Europe.

In its health check, Goodbody is forecasting a 7% increase in domestic demand next year following a dramatic 12% drop this year due to the lockdown measures introduced to contain the spread of the coronavirus.

While construction is likely to play a large part in Ireland's economic recovery, Goodbody expects housing supply to fall from current levels, even as house prices decline by up to 15% due to a reassessment of the market by housebuilders.

"Ireland's attractiveness as a destination for large ICT and healthcare firms puts it in a good position to gain from recovery," Dermot O'Leary said. 

"However, while a simple narrative about the potential recovery is appealing, it ignores that different sectors of the economy will reopen at different speeds, and many businesses will not reopen at all."

The chief economist with Goodbody said that Ireland "needs to borrow now and borrow big".

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Speaking on RTÉ's News at One, Dermot O'Leary said he disagreed with Minister Donohoe on the timeframes, and that the time is right for Ireland to borrow.

He said it is likely we will see a deficit of close to €30 billion, which is 16% of economic output.

Mr O'Leary said next year's debt level will be 120% of the size of our economy, which is high.

But he said that "old expensive debt will be replaced with new cheap debt", and the focus should be on "spending big to keep businesses open."

Meanwhile, the Local Jobs Alliance is calling on the government to establish a new state agency along the lines of the IDA or Enterprise Ireland, specifically to support SMEs.

The alliance is an umbrella group of seven leading trade organisations whose members account for around 25,000 businesses that employ nearly half a million people around the country.

They want this new body to drive the resurgence of SMEs so that they can play a role in rebooting their local economies.