The Irish government announced yesterday that an additional €375m would be made available to assist in reopening schools safely at the end of next month.
Along with last week’s “July stimulus”, this takes the cumulative direct spending in response to COVID-19 to to €16.9bn (7.9% of GNI).
Given the complications involved with Irish national accounts and the fact that this is a people-centred crisis, Goodbody Stockbrokers believe a comparison relative to population is justified. On this basis, direct spending per head in Ireland (€3,424) is now among the highest in Europe, well ahead of Italy (€1,736), France (€2,015) and now even ahead of Germany (€3,054).
The Irish government last week made changes to its COVID-19 credit guarantee scheme to make it more attractive by removing the portfolio cap, but it left the 80% guarantee restriction in place while the size was maintained at €2bn. The Irish government has introduced significant policies such as rates waivers, tax deferrals and wage supports to reduce cash-burn for businesses.
It remains to be seen whether further loan supports will be required as the new guarantee scheme gets up and running. Goodbody say this depends on the path of the virus from here, the speed of reopening in the economy and consumer and business confidence.
According to Goodbody, "Stage 3 of Ireland's fiscal response to the crisis will be in the budget in October where a national recovery plan will be set out. The new government’s record so far suggests that it will be aggressive in its response, with obvious short-term impacts on the budget deficit, which is now likely to exceed €30bn (17% of GNI) this year."