20 March 2020
By Elaine Murphy
elaine@TheCork.ie
Ibec, the group that represents Irish business, has launched a major new report that details the range of proposals for Government to effectively address the profound economic fallout of the COVID-19 crisis.
Analysing measures adopted by other European countries to date, the report outlines a two-phase strategy of
- a) Mitigation and Preservation
and - b) Reboot and Recovery
Speaking on the report’s launch, Ibec CEO Danny McCoy said: “While the public health measures remain the absolute imperative, it is vital that Government simultaneously signals confidence for our workforce and businesses. Now is not the time for reticence. Our European counterparts are well ahead in terms of levels of income continuance and scale of fiscal packages.
“Now is the time for courageous leadership and a comprehensive response to prevent a supply side shock cascading into a demand shock which would permanently close some businesses and challenge the recovery.
“The Government must now focus on acting as an income source of last resort for households who have lost their regular income. Such income support measures could require up to €4 billion of funding (1.2% of GDP) which would fund replacement rates of at least 70% of net wages lost, for 20 weeks, for up to 500,000 workers, if needed. This is a substantial exposure for the State but it is one that is essential and that we can afford. Government’s response strategy must focus on keeping firms alive, keeping their employees engaged with them and protecting the income of individuals.
“Other countries have been much more extensive in terms of State credit guarantees, with many countries putting measures in place which would, if necessary, reach 10% of GDP and greater. Significant measures will need to be put in place in Ireland in order to guarantee liquidity and prevent escalation of cash-flow issues throughout the supply chain.
“Both immediate and medium-term fiscal stimulus measures will also be required and this approach will require significant deficits by the State in 2020 and beyond with international fiscal rules and other EU measures to reflect this.”