Ibec warns ‘conservative’ lifting of lockdown will prolong downturn

Business and employers’ group Ibec has warned that the Government’s “conservative” approach to lifting Covid-19 restrictions will prolong the economic downturn.

The National Public Health Emergency Team (NPHET) meets on Thursday to discuss the road map for reopening the country.

The Government’s five-stage approach to easing the lockdown will keep many of the restrictions in place until August 10.

From Monday, small retail outlets can reopen with a small number of staff provided the retailer can control the number of customers that enter the store.

Early signs in other economies are that consumer fear of the virus and ongoing social distancing will play a major role along the path to demand normalisation

People who can work safely while maintaining a two-metre distance from others will be able to return to work.

Ibec said in its latest quarterly update that the Government was reopening the economy at a slower pace than in other countries and this would result in a higher rate of unemployment and a larger budget deficit by the end of the year.

“The length of the lockdown in Ireland, including a more conservative pace to reopening of the economy than our peers, will help determine the scale of the fall in economic activity.”

“If we plan to have a significantly longer lockdown than most developed countries then we cannot, at the same time, plan to run a deficit which is at the lower end of that same group of countries unless we are providing lower relative supports for businesses.”

Ibec chief economist Gerard Brady claimed the country is experiencing “the sharpest compression of economic activity in living memory”.

He said: “Whilst many of the collapsing economic figures presented in this report are the result of necessary public health decisions, their impacts on incomes and balance sheets are no less real.

“The recent road map published by government gives welcome clarity on when sectors may expect to be allowed reopen again, but it is also clear that normal conditions will not return for some time. Contrary to early hopes, the public health and economic crises’ will not be temporary and will last well into 2021.

“Early signs in other economies are that consumer fear of the virus and ongoing social distancing will play a major role along the path to demand normalisation. We now have to accept that the impact of living with the virus is likely to last a year or more. “