Rising prevalence of COVID-19 has triggered extensions of restrictions in the UK and Ireland over the past week. The facts have changed, so the UK and Irish government’s have changed their minds.
Goodbody Stockbrokers today warned that the same must apply to supports to deal with the ongoing economic fall-out. If the restrictions are indeed going to last another six months, Goodbody say it would be folly to believe that supports such as the furlough scheme and the various lending schemes could be wound down as planned over the next 8 weeks.
It appears that Chancellor Rishi Sunak accepts this too, with the FT reporting this morning that his department is drawing up plans for a successor that may mirror the short-time working schemes that are already in place in Germany and France for instance.
Under these schemes, employers pay wages for the hours worked, up to a certain limit, with the government topping up a certain percentage of the shortfall.
According to Goodbody Stockbrokers, "Ireland has already extended wage subsidies and income supports out to next April, albeit in a tapered way. It has also pledged to introduce a short time working scheme to replace the Employment Wage Subsidy Scheme (EWSS). The rising threat of additional restrictions though may necessitate a rethink on the scale and mechanics of these supports. Public sector replacement of private sector demand looks like it will continue for some time."