Economic revival begins but won’t be easy
Is this really the beginning of the end of the economic misery that’s been heaped upon the country for the past 13 months?
That’s the question that thousands of business owners and their staff across the country are asking themselves, following the latest reopening plan announcement.
For pubs that haven’t served a pint in 15 months, retailers who still had Christmas decorations up the last time a customer set foot in their shops and hairdressers who have had to look on with frustration and horror as the nation’s locks became increasingly unkempt, there’s now light at the end of the tunnel.
The vaccine bonus has finally arrived, or at least is now on its way, and the engine of the spluttering and stuttering economy is preparing to roar back into life.
Hope is growing that economically the worst is now behind us and the recovery is about to begin.
It will be fuelled, it is expected, by an unleashing of the €16bn in additional deposits put aside by households since last year, a promised Government economic recovery plan to be unveiled in the coming months and massive pent-up demand among a public craving retail therapy, nights out, holidays and experiences.
But the revival will not be instant, nor will it be equally experienced across all sectors.
It will be characterised by a long recuperation process that many firms will emerge limping from and sadly others won’t.
Key to it all is certainty – the fix every business craves.
Targets set out by Government have to now be met and milestones hit, so that businesses large and small can plan, recruit, restock, refinance and rebook.
There can be no further lockdowns, business leaders have repeated time and again.
Continuation of state supports for some time is also going to be vital, as is the avoidance of a so-called “cliff-edge” end to them.
The Government’s reassurance this evening that the recovery will include “economic measures to help businesses and get people back to work” and “that clear sectoral guidance and supports for business will be provided at each stage to ensure safe reopening”, will be welcomed, but requires additional detail.
Because thousands of businesses across the country are currently being kept alive by Government assistance through measures like the Employment Wage Subsidy Scheme, Covid Restrictions Support Scheme, commercial rates waivers, tax warehousing and more.
Collectively the main employment supporting and preserving schemes have already cost the state €15.5bn and this haemorrhaging of spending can’t continue indefinitely.
But should the supports get pulled too soon or abruptly, before the companies they are helping are able to stand on their own too feet again, large numbers will inevitably fail.
Insolvency rates during the pandemic have so far remained remarkably low due to the forbearance that has been shown by lenders and creditors, as well the support that’s been received from the Government.
However, recent research from the Central Bank found as many as one in every four businesses could be at risk of failure when supports are eventually withdrawn.
For some, like Joe Walsh Tours which ceased trading earlier this week for example, even getting that far will be struggle.
Sectors will inevitably recover at different speeds.
Retail should get a pretty immediate demand-driven shot in the arm, as will personal services like hairdressers for example and construction.
Hospitality too, will get a summer boost, with continuing international travel restrictions likely to force many of us to “stay-cay” again this year.
But once the summer ends, if we have not got to the point where people can eat, drink and gather in numbers inside again, restaurants, pubs and coffee shops could be facing leaner times once more.
The effective ban on non-essential overseas travel will continue to hurt the airports, airlines, travel agents and those who depend on international visitors coming into Ireland.
The events and entertainment industries also look like they are going to have to wait a good bit longer, with mass indoor gatherings still some way off.
Businesses in urban settings that are dependent on pre-pandemic levels of footfall, like cafes, newsagents and dry cleaners, will continue to suffer until workers are allowed to return to the office in large numbers again.
In that regard the roll out of cheap and readily available rapid-Antigen testing increasingly looks to be a vital cog in the reopening wheel.
It can be used and indeed is already being used, to keep the virus at bay in many workplaces.
As a tool it cannot be ignored as a way of safely bringing customers back too, as the recent experimental concert involving 5,000 people in Barcelona showed.
Concerns and remaining challenges aside though, there are many reasons for businesses and consumers to be hopeful, and they are.
The Bank of Ireland Economic Pulse’s measure of business confidence is higher now than it was before the pandemic began.
Consumer confidence, as measured by the same index, is also up this month for the third month in a row.
If the last year has taught us anything, it is that we shouldn’t underestimate Covid-19 and there will surely be further twists and turns ahead, particularly if we aren’t careful.
But for now at least, Ireland’s business community and those who work within it, can look forward with some sense of optimism that this torrid chapter in Ireland’s economic history is perhaps starting to draw to a close.