July Stimulus last chance for survival of vulnerable firms

Chambers Ireland highlights measures necessary to protect jobs, prevent firms failing and support the recovery.

Chambers Ireland CEO Ian Talbot has called on Ireland’s Government to use all resources to reboot the economy, warning that the promised July Stimulus could be the last chance to ensure the survival of vulnerable businesses.

Representing 40 Chambers, more than 8,000 businesses and with a geographic reach in all major cities, regions and towns, Chambers Ireland has been closely monitoring the impact of the Covid-19 crisis on the Irish economy with surveys and research.

“If the State intervenes, we have a much better chance of protecting local economies all over the country. Without such an intervention, the economic outlook is bleak”

Its most recent survey results published in June, towards the end of Phase 1, found business activity levels are extremely low. Businesses that have opened are typically experiencing less than half of their usual levels of business activity for this time of year

The median expected revenue over the next three months (relative to what they would have expected to be earning in a typical year) has risen from -60pc to -50pc over the next three months, so most businesses expect their earnings over the coming three months to be half the normal amount.

Around 25pc of businesses expect to have earnings that are -70pc of their usual level.

Irish regions are being hit the hardest

The impact of revenue decline is being felt more strongly in the regions, notably in the west, border counties and the south-east

“Measures introduced to date to support businesses to re-open have played a positive part in reducing some of the economic damage,” Talbot said. “In particular, the introduction of the TWSS (Temporary Wage Subsidy Scheme) has been extremely successful in protecting jobs and incomes, while businesses trade through the pandemic.  However, it will be critical that supports like this are continued for vulnerable sectors.

“The ‘re-opening’ of the economy is a tremendously tricky task. The first Phase of lockdown ultimately involved freezing all social and economic activity. The current phase, unfortunately, is not a return to normal trading conditions, but instead is a balancing act, where we both try to live and do business around the virus, while ensuring we do everything to avoid a second wave.

“Because of this, the possibility that Covid-19 will result in a shallow recession with a V shaped recovery, is unrealistic. Instead, this crisis will likely affect us over a period of years rather than months.”

Talbot said that the actions Government takes in the coming weeks will determine how many jobs we save and how many businesses will survive the coming months.”

Ahead of the July Stimulus, Chambers Ireland calls on Government to take several far-reaching actions, including the following:

  • The extension and reform of the Wage Subsidy Scheme for vulnerable sectors. This reform must include allowing vulnerable sectors, many of whom are seasonal, to hire new staff under the Wage Subsidy Scheme.
  • A 12-month waiver of commercial Rates for impacted businesses, with an accessible mechanism, and commitment to ensure that Local Authorities receive additional central funding to make up for the short-fall.
  • A new expansive model for grant aid so businesses can tackle the mounting costs of debt and outstanding invoices.

Talbot said the introduction of the “Restart Grant” was a welcome first step in supporting business to re-open, but ultimately did not go far enough. Without a significant intervention from the State, the debt burden will become insurmountable for many, with closures and job losses inevitably following.

“Our asks are not new. These are issues which have been visible since the early days of the crisis and we have consistently called for Government to intervene. Now that we have a new Government, with a new mandate, an expansive, ambitious program of supports must be introduced.

“In the early days of the Covid-19 outbreak, most economic activity was required to halt, which caused what we referred to as a mini-ice age. This decision, although the right one, has an economic cost.

“If Government does not continue to intervene in a meaningful way, with a package totalling billions of euro, then it is quite probable that huge numbers of jobs and job creators will be lost to the economy. If the State intervenes, we have a much better chance of protecting local economies all over the country. Without such an intervention, the economic outlook is bleak,” Talbot warned.

Written by John Kennedy (john.kennedy3@boi.com)

Published: 15 July, 2020