What will Covid-19 mean for the Irish economy?

Aoife O'Brien

Pubs have been closed, sporting events have been cancelled and mass gatherings have been prohibited.

Throughout Ireland and across the globe, governments plead with their people to stay at home and avoid unnecessary contact with others.

This social distancing is necessary in order to save hundreds of thousands of lives globally but once this pandemic is over the lives that we will be returning to will be ones of financial struggle and economic uncertainty.

The Covid-19 virus which first emerged in Wuhan in China at the end of 2019 arrived in Ireland on February 29th, 2020 and brought with it all manner of restrictions.

With the highly contagious virus continuing to spread across the country, more and more people are adhering to social distancing guidelines and while most businesses can legally still remain open in Ireland, many are being forced to close because there are simply no customers coming through the doors.

For these businesses, a government-enforced lockdown would, in fact, be preferable.

This would mean they could claim against their insurance policies for loss of projected earnings.

However, as it stands there is no clause in insurance contracts to protect against something like the coronavirus and because the government has not forced their closure these businesses are left with nothing.

Of course, expecting insurance companies to compensate every company for their loss of earnings due to the virus would also be financially unsustainable also and there would be nowhere left for a business to get insurance once the pandemic is over.

According to the Economic and Social Research Institute, if the outbreak can be contained to a single quarter and the public can begin returning to their normal social activities by June then the Irish economy could still register positive growth this year.

However, as a small open economy heavily reliant on international trade, any potential growth would rely on other countries recovering from the pandemic at equally as fast a rate.

It is expected that up to 400,000 people could soon be out of work in Ireland. This is almost the same rate of unemployment that was reached after the financial crisis which broke in 2008 where the Live Register peaked at just over 470,000 in 2011.

The government has introduced an emergency unemployment benefit for those who have been made temporarily redundant because of Covid-19 and are borrowing heavily from Europe to do so.

However, the government claims that because the 2020 budget had been planned to deal with a no-deal Brexit they will still be operating with a surplus of cash that can be invested into the economy after the pandemic.

Despite the concerns for how our economy will recover post coronavirus, there is a consensus that all of the measures the Irish government is taking are necessary and businesses are willing to comply with these measures and any others that are put in place.

But nobody wants to see a return to the years of austerity and all we can do is hope that we had gotten the economy to a strong enough position pre-Covid-19 that there will still be jobs to go back to once the pandemic is over.

By Aoife O’Brien

Image: Wikimedia