Government urged 'to throw kitchen sink' at Covid-19 crisis to save jobs

The Government was urged this evening to take “costly but bold measures” to guarantee Irish small and big companies from collapse after the British prime minister Boris Johnson declared the UK was fighting a war against the coronavirus outbreak as his government pledged a massive package of loans and grants for businesses to shore up the economy.

Help was announced with British home loan costs, airlines, and the hospitality industry, as UK ministers pledged a package that Bloomberg estimated ran to £330bn (€360bn) worth of government-backed loans for struggling companies.

Economist Jim Power said a proportionate response here would be a package of €36bn.

“These are incredible times, and the government will have to throw the kitchen sink at this — otherwise businesses big and small will go bust,” Mr Power said.

It is essential that Aer Lingus and Ryanair, which bring in 10.8m overseas visitors a year to this island are protected.

"The crisis requires case-by-case subventions to guarantee that the wages are paid and that the banks are forced to support all businesses,” he said.

“A package of €36bn would be credible,” in an Irish context, he said.

The British response came after many days in which its actions to fight the Covid-19 outbreak had been criticised as inadequate.

It came after the French government and US President Donald Trump had pledged huge spending plans to rescue their economies from permanent damage.

Capital Economics in London said the UK measures “probably won’t prevent a precipitous decline” in the British economy in the next three months but “it should help to prevent a longer-lasting fallout by reducing the chances that the economic crisis morphs into a financial one”.

“First, by pledging up to £330bn (15% of GDP) of state guarantees for bank loans to firms, the government went further than the French government whose guarantees are worth 12% of GDP,” the economists said.

The UK “also announced a package of direct support for businesses worth more than £20bn (or 0.9% of GDP), which comes on top of the £12bn (0.6% of GDP) announced in last week’s budget” as well as cash grants for businesses,” the consultancy said.

“Third, the Chancellor pledged more help for households. There was not much detail on the specific measures or the size, aside from a three-month mortgage holiday. But [Mr Rishi] Sunak said they would announce more in the coming days with the aim of limiting the blow to employment and incomes,” it said.

Capital Economics said: “Overall, this is a pretty big package alongside a credible commitment to do whatever is necessary to support the economy no matter the cost.

With policymakers acting quickly and working closely together, this raises the chances that, beyond the huge hit to GDP that is likely in Q2, a prolonged economic slump will be avoided.

Meanwhile, the focus remained on the airlines.

S&P Global Ratings believes the pandemic “could reduce global air passengers by up to 30% in 2020”.

The rating firm said: “The rapid spread of the new virus across the globe has caused air traffic demand to plunge in recent weeks.”

[snippet1]987600[/snippet1]