Following the publication of the Stability Programme Update from the Department of Finance, Fianna Fáil Spokesperson on Finance Michael McGrath has said that the economic fallout from the COVID-19 outbreak is unprecedented but that Ireland can recover.

Deputy McGrath said, “The projections laid out in the Stability Programme Update (SPU) are quite staggering. By the end of the year, Ireland’s productivity is set to decline by 10.5%. Taking GNI* which excludes certain multinational activity, Ireland’s economy is expected to shrink by 15.5%. On top of this, over 1 million people are currently relying on some sort of income support from government. The fiscal projections are also stark. It is expected that Ireland will have a deficit of around 7.4% this year amounting to some €23 billion. The Department of Finance has warned that these figures could deteriorate further depending on how the outbreak evolves in the coming months.

“While we all hope for a v-shaped recovery where economic activity picks up significantly when restrictions are lifted, the reality is more likely to be a steady and more prolonged recovery period.

“Despite the stark warnings in the SPU, there are positives too. The borrowing environment for Ireland is extremely favourable. The cost of Irish debt remains exceptionally low. Ireland will urgently need a new National Economic Plan. This plan will need to take a deep dive into each sector of the economy and bring forward policy responses to assist in the recovery.

“In the immediate term, it is critical that the working capital supports are maintained and enhanced to prevent businesses from needlessly failing. We need to look at the operation of the various working capital loan schemes and we need to ensure they are accessible and affordable. SME grants and loan guarantees need to be considered, and the need for working capital among larger companies cannot be ignored.

“As restrictions begin to recede, it will be critical that the State supports a high level of capital investment. This will both create jobs and stimulate demand in the economy.

“European unity at this time must be maintained. There has to be an ambitious recovery package from the EU and Ireland needs to be at the heart of these discussions. Of course, we cannot ignore Brexit. Today’s SPU highlights the imperative of reaching a free trade agreement with the UK by December 2020 or, failing that, an extension to the transitional period.

“The SPU is sobering in its outlook. Undoubtedly, Ireland faces a very challenging road ahead. Time and time again the Irish people have shown a capacity to deal with such adversity. While the future maybe daunting, I fully believe that our country has the capacity to meet the economic challenge that lies ahead”, concluded McGrath.