An underwhelming economic response
It is self evident to state that Government and financial support is required urgently now if Ireland is to have a tourism industry still standing once the crisis passes. To date Government’s efforts have been, completely understandably, on public health issues and its economic focus has been on softening the blow for employees who find themselves without a job. However, the big gap in the Government action to date has been a lack of significant business and employer supports and this must change without delay particularly for the tourism industry.
Minister for Finance Paschal Donohoe has an unenviable task as the Irish economy nose dives. However, it is clear that Ireland is an outlier in terms of its economic response for businesses and employers to Covid-19. Tentative first steps have been taken – Vat payments, bank commercial loans, and local authority rates all deferred for 3 months – but these are wholly inadequate to the size of the challenge confronting the 20,000 tourism and hospitality businesses up and down the country. The timeframe for these measures simply must be extended for the rest of 2020 and deferrals cannot simply mean that business continues to incur the liability albeit at a later date.
Recent analysis conducted by IBEC, of which ITIC is a member organisation, point to the fact that the fiscal measures announced to date by Ireland in response to Covid-19 amount to 0.9% of GDP. Compare this to Germany’s 16.3%, France’s 15.3% or the UK’s 14.9%. Ireland is way behind the curve. Indeed the UK, remiss on its public health responsibilities but bold with its economic response, has shown Ireland the way with a £330 billion package. Furthermore the UK Chancellor has announced paying 80% of salaries in affected companies, a commercial rates holiday for 12 months, and £25,000 cash grants to individual businesses. It would seem that Ireland needs to get very serious very quickly about the business impact of Covid-19 and borrow big, as other European nations are doing, to stabilise the economy. Once this is done, and a multi-billion euro package is announced, tourism and hospitality needs to get a significant share. Ireland’s largest indigenous industry and biggest regional employer deserves no less.
It is time for Government to spend to protect the economy. ECB funds can be accessed at very low interest rates and if ever there was a time to increase national debt to rescue the economy it is now.