Over one million Covid-19 emergency loans have been advanced to UK companies that are 100%-guaranteed by the British government, starkly showing the wide gap in supports for firms in the Republic.
The new British figures show that its main Bounce Bank Loan Scheme has delivered over 967,320 loans to a value of £29.5bn (€32bn) while its Coronavirus Business Interruption Loan Scheme has distributed a further £10.5bn through 52,275 loans, and its Coronavirus Large Business Interruption Loan Scheme has delivered £2.3bn through a further 359 loans.
The combined cost of the over one million loans through the three UK government lending schemes amounts to £42bn, overshadowing any such scheme in Ireland and highlighting the gaps that exist in Irish Government supports.
The British figures suggest that Finance Minister Paschal Donohoe may only be playing catch up with the British and other governments, including the Swiss and the Germans, when he unveils his jobs and stimulus packages in the coming weeks.
The UK's Bounce Back Loan Scheme is 100%-guaranteed by the British state which means that commercial banks have the confidence to lend to businesses caught up in the Covid-19 economic storm without fear they will be exposed to huge default loan losses. In the North, AIB and Bank of Ireland tap the 100%-guaranteed schemes to lend to businesses.
On its website, AIB says the length of the loan is six years but early repayment is allowed, without early repayment fees and with no repayment for the first 12 months.
“The UK government will pay us, on your behalf, the interest for the first 12 months of the loan as a Business Interruption Payment so you don’t have to. Thereafter interest will be payable at a fixed rate of 2.5% per annum. We will not charge an arrangement fee,” AIB says.
Conall Mac Coille, chief economist at broker Davy, said the low pick-up of equivalent Irish Government loan schemes suggests there is much distance to cover in futures jobs and economic stimulus packages.
Allowing for the relative sizes of the economies, the Irish Government's Pandemic Unemployment Payment and wage-support schemes, which between them support over 800,000 jobs, appear to match in scope the equivalent British schemes.
Britain’s Coronavirus Job Retention Scheme supports 9.3 million jobs at a cost of £25.5bn and its £7.7bn Self Employment Income Scheme supports 2.6 million jobs.
Meanwhile, figures from the Central Bank starkly show the effects of the Covid-19 crisis across the Irish economy.
Households deposited a further €1.5bn in Irish banks -- paying little to zero interest rate returns -- in May to bring the total amount of household deposits to €117.5bn. That is up from €107bn in May 2019.
Deposits by businesses also rose, to over €64.25bn, up from €56.8bn a year earlier, according to Central Bank figures.
The Central Bank also said home mortgage loans fell by €129m in May, and consumer lending was down by €162m.