I am aware that the economic impact of COVID-19 has not been the same across all sectors of the economy. For some sectors, especially those that require personal contact with customers, such as retail and hospitality, it has been more difficult to adapt to social distancing requirements. Amongst the most heavily-impacted are those where the duration of the disruption, ongoing restrictions on international mobility and distancing requirements necessary to prevent spread of the virus, remain a barrier to capacity or resumption of normal activity and productivity.
The priority of the Government continues to be the wellbeing of our people and communities and the best economic policy is to put public health first. But we are increasingly focussing on business and on getting as many people as possible back to work.
To date the Government has provided enhanced provisions to a value of almost €20 billion. While these supports are wide ranging, they will by their nature be of most assistance to the most heavily impacted firms and sectors.
The July Stimulus Package was, as promised, a package of measures of sufficient scale that demonstrates the commitment this Government has to save enterprises, limit the damage to our economy wreaked by this pandemic and get our people back to work. Indeed, it is bigger in scale than most budgets and it is being deployed at speed.
Businesses, including those in the retail and hospitality sector, will be able to benefit from many of the actions within the July Stimulus including:
- The Temporary Wage Subsidy Scheme and its successor the Employment Wage Subsidy Scheme has, and will provide, absolutely critical assistance to impacted businesses right across the economy. For the most heavily impacted sectors such as hospitality, the schemes will give businesses a chance to resume activity while operating under the constraints demanded by public health requirements by heavily subsidising probably their largest variable cost.
- The Online Retail Scheme, administered by Enterprise Ireland, helps support companies in the indigenous retail sector with a pre-existing online presence to respond to both the domestic and international consumer demand for a competitive online offer. To date, funding under this scheme has been provided to 185 retailers with a total of over €6.5 million awarded.
- We have provided substantial Restart Grants of up to €25,000 to a broad category of businesses such as hairdressers, sports clubs, cafes, restaurants, B&Bs, independent hotels to help cover the costs incurred during closure and reopening costs. By the 4th September, approvals to the value of €155 million were approved under the Restart Grant and €187 million under the enhance Restart Grant; a total of €342 million.
- We have introduced a temporary reduction in VAT from 23% to 21%, this will assist retail in particular but also benefit many other sectors of the economy.
- The ‘Stay and Spend’ initiative will see consumers benefit by up to €125 each for expenditure on hospitality activities during the traditional ‘off peak’ for this sector.
- We also allocated €10 million to a Restart Fund for the Tourism Sector to aid recovery.
- Recognising the economic impact of Covid-19 on pubs, bars and nightclubs, and to assist planning and adaptation for their re-opening, an additional €16 million support package for the sector was announced at the end of August. This included a 40% Restart Grant Plus Top Up for pubs, bars and nightclubs that remain closed to help them to reopen; a waiver of court fees and associated excise and stamp duties relating to the renewal of pub and other liquor licences in 2020; and a waiver of excise duty on on-trade liquor licences on renewal in 2020.
- Several other initiatives to provide vital liquidity to all firms who are experiencing impacts have been introduced including rates waivers, delayed payment of PAYE and VAT debts, in part or in full, for a set period with no interest or penalties, and the early carryback of trading losses providing immediate cash-flow support to previously profitable companies.
- Most recently, I announced the opening of the new €2 billion COVID-19 Credit Guarantee Scheme to provide Irish businesses with access to low cost loans as they respond to the impacts of COVID-19. This is the biggest ever state-backed loan guarantee in Ireland. A large number of non-bank finance providers, including a number of Credit Unions have also applied to participate in the scheme, as part of an open call process.
- The Microfinance Ireland Covid-19 Loan scheme also recently reopened. Under the first phase of this scheme, 687 loans were approved to a value of €18.68 million. This represents three years of normal lending volumes for MFI in a period of just over four months. I expect the new tranche of funding will provide a lifeline to even more micro-enterprises enabling them to re-open, stay afloat or expand.
Having come through the initial economic shock with unprecedented levels of State intervention stabilising the economy, the focus is now on sustaining the recovery in the face of uncertainty and disruption while seeking to minimise permanent loss of economic activity and employment. As such, the next steps in our recovery journey will be mapped out in the October budget and the subsequent National Economic Plan.
As per the recent Budget 2021 Strategy announcement, Budget 2021 will see additional crisis-related supports tailored to those sectors and workers who are most in need.
The National Economic Plan will set out a vision for what our post-Covid economy will look like. The plan will set longer term objectives for the economy post crisis and identify policies and strategies to achieve those objectives. While the focus of Government action up to now has been on protecting workers, households and firms, the plan will need to look to the future and show how our economy can be positioned to exploit opportunities for growth in emerging sectors and in areas such as new ways of working, while also addressing how we will prepare for the transitioning of enterprises and workers in response to technology and climate change developments. Ireland’s flexible and skilled labour force has traditionally been a strength of the country and reskilling and upskilling of the labour force in response to anticipated future skills needs a core element to be progressed under the plan.
The plan will be progressed over the coming weeks and I would expect it to launch in November.