The tight lockdown on large parts of the economy means that the financial rescue programme put in place in 2020 will have to continue. The basic tools are in place in the Pandemic Unemployment Payment, the wage subsidy scheme and grants to affected businesses, as well as a range of other schemes to delay tax payments and rates when necessary. Nonetheless with some sectors being closed for the third time and a number having remained closed since last March, the economic toll will rise. Many businesses will not reopen and others will be left significantly smaller.
The Government has no option but to continue to support businesses – and individuals who are out of work. While this comes with an up-front cash cost, it will lower the long-term economic price when the pandemic is over. With businesses closed and jobs lost due to public health decisions, it is also clearly the correct route to take.
Fortunately exchequer figures published during the week showed that borrowing last year was lower than had been anticipated. This was due to surprising strength in tax revenue. Corporate taxes rose strongly, while income tax held up remarkably.
This is testament to the resilience of much of the economy, which has operated through the pandemic. But unfortunately the problems in the consumer-facing sectors will now deepen, with Tánaiste Leo Varadkar warning that many could stay closed until the end of March.
The crisis will leave an economic legacy. The unemployment rate averaged 18.4 per cent last year and this figure will rise again now. Unfortunately, many on the PUP will not now return to their former jobs. There is only so long that many businesses can hold on.
With vaccines on the horizon, the incentive to support businesses is all the greater, as at some stage restrictions will ease for good. However, it is a concern that this could be later this year than had been hoped for. In particular, the prospect of further lockdowns after this one ends cannot be ruled out.