How the Next Few Months Look for the Irish Economy?

14 May 2020

By Nicholas Killeen

How the Next Few Months Look for the Irish Economy?

As the Irish government begins Phase 1 of this Covid-19 exit plan, there’s still a lot of uncertainty on how the next few months will look like as we somewhat try and get back to a state of normality.

Employers group IBEC says the Government needs to step up its pandemic budget plans and to develop a more ambitious long-term investment plan and social contract. The call came as Ireland faced its second major economic crisis in less than a decade and one that could leave a long shadow of shuttered businesses and workers without jobs due to the impact of the coronavirus lockdown.

"While economic dislocation has been sudden, its full impact has not yet been felt and is likely to last for years," said chief executive of IBEC Danny McCoy.

"Government must do whatever it takes to offset the significant economic shock of Covid-19," IBEC said. It called for the State to expand its primary deficit by one percentage point for every percentage point by which the economy is expected to shrink. The first step, the industry group said, was to boost Government spending with new measures equal to around €15bn in addition to the money already allocated. While the Government recently stepped in with support for businesses to ensure that as many as possible survive and are in position to start investing and hiring again, IBEC noted the scale of public support to address the liquidity crisis in businesses was "far behind those in most other countries".

As the Government mapped a tentative path to reopening the economy - starting on May 18 and running in phases for businesses where health risks are greater.

However, the opening of some economies that initially appeared to have experienced a relatively low rate of deaths such as South Korea and Germany, was accompanied by a spike in infections that many feared was the start of a second wave of coronavirus.The easing of restrictions in other countries has not led to a rapid economic recovery, according to data from Austria and Denmark which shows that people are staying away from public transport and areas that used to be crowded.

Ireland's worst-affected sectors are in food and accommodation. The number of people unemployed or dependent on the State in some form for their income is now 1.1 million - around half the workforce.

A survey by IBEC of 550 chief executives showed that almost three quarters expected to see pre-Covid business levels up to a year after the lockdown restrictions end and that 41 percent of those surveyed had laid off workers or put them on short-term working.

So what happens next within the economy?

About 1,500 retailers will reopen their doors next Monday as the State moves to the first phase of its plan to reopen the economy, according to figures from a retail lobby group.

But, the cost of reopening will run anywhere from €3 million to €7.5 million for the sector to protect its staff and customers against Covid-19, according to David Fitzsimons, chief executive of lobby group Retail Excellence. Expenses will include installing Perspex screens, developing signage and implementing policies to ensure social distancing. Under the Government’s road map to reopening the Republic’s economy, retail outlets that are primarily outdoor, such as garden centres, hardware centres and farmers markets, can open from Monday 18th. Additionally, homeware stores, opticians, motor and bicycle repair outlets, office product stores, electrical, IT and phone sales and repair stores can reopen. Ryanair plans to restore 40 per cent of flight schedules from July 1st, including 139 routes from the Republic, the airline said on Tuesday.

The Irish carrier announced that flights on 90 percent of its route network would be restored, with schedules returning to about 40 percent of previous capacity. This means fewer flights will be flown on routes than was the case before Covid-19 lockdowns. The airline stressed that this was subject to governments lifting travel bans within the EU, and public health measures being put in place in airports.

Ryanair will operate a daily flight schedule of almost 1,000 flights, restoring 90 per cent of its pre-Covid-19 route network,” the airline said. Cabin crew will wear face masks and a limited inflight service will be offered of pre-packaged snacks and drinks, but no cash sales.

As a temporary further public health measure, while EU States emerge from their respective Covid-19 lockdowns, Ryanair will require all passengers flying in July and August to fill in details - at the point of check in - of how long their planned visit will be, and also their address while visiting another EU country.

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