A euro on the price of a pint and a €10 Covid supplement for a meal could be the way out of the economic crisis for many pubs and restaurants and for the tens of thousands of people they employ, according to economics professor Alan Ahearne, who is an adviser to the Central Bank.
Mr Aherane said economists are grappling with ways for businesses like pubs and restaurants to start re-employing thousands of their laid-off staff, as it seems unlikely there will be a ‘big bang’ lifting of social distancing and the public health advice will likely be for a gradual, sector-by-sector re-opening of the economy.
“In some sectors, employment growth will be quite quick. Like in construction, if those restrictions are lifted in the next few weeks, people can get back to work there quite quickly,” said Mr Ahearne, who was until recently a member of the Central Bank commission and is still the chair of its risk committee.
“But on the other extreme, tourism. When will we start seeing either domestic tourists or tourists from abroad coming back here? That will be a long time,” he said.
Mr Ahearne was the adviser to the late finance minister Brian Lenihan when he joined the Department of Finance in 2009, as the State was hurtling towards the bailout from the troika.
“It does look like social distancing will be with us for a very, very, long time until the vaccine arrives,” he said. And it may be possible for restaurants to adopt different business models by taking tables out and surcharge “an extra €1 a pint or a Covid surcharge of €10 a meal” to compensate for lower sales and to make up some of the losses made during the crisis, Mr Ahearne said.
His comments come as official figures last week showed almost 1m of the labour force of 2.3m people were claiming some sort of unemployment or Covid-19 payment.
Mr Ahearne also said the Government will almost certainly have to guarantee ultra-cheap loans for Irish banks to pump into businesses if many small firms are to survive the Covid-19 economic storm.
He said the State can afford any such guarantees because it can borrow at close to zero rates.
Meanwhile, Europe will need at least another €500bn from the EU institutions to finance economic recovery after the pandemic, on top of the agreed €500bn package, said Klaus Regling, the head of the eurozone bailout fund ESM.