Finance ministeroutlines the unprecedented economic support measures the Government are putting in place to help businesses recover from the pandemic crisis
Unprecedented times call for an unprecedented response. The Covid-19 pandemic has greatly impacted the economic and social life of Ireland, with consequences — including profound and personal ones — for many.
The Government acted swiftly, and on the basis of expert medical advice available, to limit transmission of the Covid-19 disease, protect lives, and support livelihoods. Unfortunately, the impact of this necessary response has been an economic deterioration unprecedented in terms of its speed and scale.
The impact on jobs has been significant, as we moved from effectively full employment at the start of the year to record levels of unemployment now.
Indeed, latest CSO figures indicate a rate as high as 28.2% if all claimants of the Pandemic Unemployment Payment (PUP) are classified as unemployed.
While all parts of government have been acting in a joined-up way, the key departments at the front-line of our national response are the Department of Health, the Department of Employment Affairs and Social Protection, and the Department of Business, Enterprise and Innovation.
A robust public health response is the first crucial element of our response to this pandemic. Up to now, approximately €2bn has been provided to the HSE in order to respond to this crisis.
This is being used to fund the scaling up of Health and Social Care activities, in line with the National Action Plan in Response to Covid-19. This includes the expansion of acute and community services and purchase of health products and equipment, including ventilators and personal protective equipment for our front-line workers.
This funding is also being used to provide support to nursing homes and to secure 100% of private hospital capacity, so that as a country all of our national clinical resources are being mobilised against this pandemic.
In the area of Employment Affairs and Social Protection, we have put in place the PUP to support workers who have lost their jobs, and a Temporary Wage Subsidy Scheme to help maintain the important link between employers and employees.
It is estimated that these schemes, in aggregate, will have an impact of approximately €4.5bn over a 12-week period. There will be further costs as and when the Government extends these supports, to take account of the roadmap to re-opening our economy.
However the costs — both social and economic — of not acting would have been, in my view, much higher and as the economy starts now to enter its gradual recovery phase, we will see the benefits of standing by our workers and our employers.
In recognition of the challenges facing businesses in terms of liquidity, the Department of Business, Enterprise and Innovation is being provided with additional funding of €250m to provide cash-flow support to businesses.
In aggregate, alongside the re-purposing of the Brexit Loan Scheme, this funding will, support the provision of up to €1bn in liquidity measures.
On May 2, the Government announced a further suite of supports to help our small, medium and larger businesses to restart, reconnect and rehire staff who have been laid off or furloughed. This includes a new €250m Restart Fund to support small businesses. In addition to these direct expenditure measures, this suite of measures includes:
- A three month commercial rates waiver for impacted businesses
- A €2bn Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund (ISIF), which will make capital available to medium and large enterprises
- A €2bn Covid-19 Credit Guarantee Scheme to support lending to SMEs, for terms from three months to six years, below market interest rates
- The ‘warehousing’ of tax liabilities for a period of 12 months after recommencement of trading during which time there will be no debt enforcement action taken by Revenue.
The scale of these economic support measures are unprecedented and, taking into account the most up to date position in relation to the reopening of the economy, the deficit for the year could reach up to 10 % of GDP, or €30bn.
This reflects both the scale of the expenditure measures implemented by Government as well as the decline in taxation revenue arising from the Covid-19 crisis.
The State can, should, and will borrow to cover this deficit. The reason that we can afford to borrow and invest on this scale, in support of our economy and our citizens, is the credibility that the State and the people have built up over the last decade.
The right policy choices have allowed us to get the public finances in order, reduce borrowing and return the State’s balance sheet to surplus. These things do not go unnoticed. This, coupled with the work being done by our own Central Bank and the European Central Bank, as well as the supports agreed at EU level mean we are fighting back on firm footing.
The world knows that Ireland has faced tough times before. The world knows that, as a nation, we have risen admirably to similar challenges in the past. And we will do so again.
Paschal Donohoe is minister for finance and a Fine Gael TD for Dublin-Central