The long goodbye to one of the world’s harshest lockdowns

Analysis: Ireland in a race against time to vaccinate enough people to allow reopening

Mask-wearing mannequins in Monaghans on Anne Street South: The arrival – and apparent potency – of the vaccines has changed the debate. Photograph: Alan Betson
Mask-wearing mannequins in Monaghans on Anne Street South: The arrival – and apparent potency – of the vaccines has changed the debate. Photograph: Alan Betson

It has been clear for some time that the wider reopening of the economy was going to be cautious and inextricably tied to the vaccination campaign. The limited easing of restrictions during April and the cautious plan thereafter underline this. It is a long goodbye to one of the world’s harshest lockdowns.

Ireland is now in a race against time to vaccinate enough people while keeping numbers down. As well as the key public health goals, this would allow the economy to reopen more fully for the summer. It could be a tight enough finish timewise. However, if vaccines can be rolled out quickly, evidence from other countries – particularly Israel – give cause for hope that there will be a tipping point when case numbers start to fall consistently. Ireland needs to get to that point by late May or June if there is to be a wider economic reopening from June on.

The latest lockdown has had a big economic impact, though a new analysis from Davy stockbrokers points out that it has not been as dramatic as during the first lockdown. Last spring, the numbers unemployed, including on the pandemic unemployment payment (PUP), touched 600,000. This time around they peaked at 480,000 – a good deal lower, but still about a quarter of the entire workforce. Consumer spending also held up better this time.

But the lockdown here has been one of the strictest internationally. And so the economic impact on the affected sectors in Ireland is enormous. The decision now is to go for a slow reopening – even holding off on an immediate restart of retail click and collect, for example– in the hope that this will lay the ground for a summer acceleration. The worry was that moving quicker would risk pushing numbers up and delaying everything.

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Absence of detail

This strategy will not come as a surprise to businesses, even if some – notably construction – hoped for a quicker timeline. There is frustration in the affected sectors at the absence of a detailed pathway for the months ahead, tied to a vaccine timetable. The Irish Business and Employers Confederation (Ibec) said businesses will need greater certainty. But the Government says it is essential that when businesses reopen they can stay open this time – and that clarity on dates is not possible.

Some pointers were given. The Government has signalled the retail sector should reopen gradually in May, along with personal services. Together with the full reopening of construction, this should take a significant chunk off the PUP. There are 135,000 in both sectors on the payment, though not all will return to work.

If May can be negotiated successfully, then the big questions will be about when – and how – hospitality can reopen. Taoiseach Micheál Martin said the reopening of hotels, guest houses and bed and breakfasts would be considered in late May – suggesting a restart some time in June for the peak summer season. Though indications are that inter-county travel necessary for a staycation season may only restart in July. There was no mention in his speech of a timescale for restaurant reopening – the sector says indications are that it might be July.

Economic debate

Beyond that there are sectors like overseas travel (inward and outward), events, wet pubs and the arts, where reopening remains uncertain. Experience in Israel and the UK will be closely watched for pointers.

However, the arrival – and apparent potency – of the vaccines has changed the economic debate. When will the tipping points come when risk starts to reduce significantly and reopening can accelerate? Israel eased restrictions when it had about 40 per cent of its population fully vaccinated (Palestinians are lagging well behind) and has seen a sharp drop in deaths and cases. Ireland might get to a similar point in late May or June, assuming no more supply or vaccine problems.

So this is the rationale for holding on now – and for hoping that a wider reopening will be possible running into the summer. Other tactics may help, notably the wider use of antigen testing to allow schools and universities to stay open safely and also help with workplaces as the vaccine numbers climb among younger age groups.

A reopening of retail, personal services and hospitality would lead to a significant surge in consumer spending and a rebound in the economy in the second half of the year. However, reopening will be slow and unemployment will remain high. The Government will remain under pressure to support businesses as they restart – and those which remain closed – pushing up borrowing, though taxes will pick up.

For a recovery to happen, the vaccine campaign must run on schedule or ideally a bit faster. The daily vaccination totals have risen in recent days but we now face a crucial period to see whether supply does arrive and the required weekly targets of 250,000-300,000 can be met.