Ireland’s rescue plan consists of grants, tax cuts and loan guarantees devised to restart and reboot the economy.

The Government of Ireland has revealed the largest cash injection in the history of the State in a bid to revive the economy after the havoc wreaked by the Covid-19 pandemic.

The plan includes more than €5bn in cash and €2bn in loan guarantees devised to keep businesses afloat and keep people at work.

“This is a comprehensive plan which will boost the economy and bring confidence back to towns and villages across Ireland”

It consists of five key elements: €2.6bn in income support, including the wage subsidy and PUP (Pandemic Unemployment Payment) scheme; a €2bn credit guarantee scheme; some €1.3bn worth of tax measures; €1bn worth of business supports including training and education; and €500m worth of accelerated public investment.

Ireland’s Taoiseach Micheál Martin, TD, said that the stimulus package which was announced last night (24 July) will protect existing jobs while creating new and sustainable employment options in the months and years ahead.

“These measures will support small and medium businesses, give young people greater opportunities in training and education, support workers who have lost their jobs because of the pandemic and rejuvenate communities worst affected by the economic impact of the virus,” Martin said.

“This is a comprehensive plan which will boost the economy and bring confidence back to towns and villages across Ireland.”

Rebooting Ireland

The measures come at a critical time as the country’s spending is going to be €16bn ahead of what was expected before the pandemic. It is understood that the budget deficit this year could reach €30bn.

“Our main objective is to save jobs and create new ones”

Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar, TD, said that Ireland has made enormous progress suppressing the Coronvirus/Covid-19 and significant progress has been made to restart the economy.

“More than 280,000 people have already got back to work,” Varadkar said.

“Repairing the damage wrought on the economy – and keeping the virus contained – is vital for the wellbeing of our people. Today’s stimulus package is the next step in our national recovery story.

“It is designed to help businesses which haven’t reopened yet and those struggling to do so. We have listened to businesses and responded with a package of scale and speed to meet their most immediate needs. Our main objective is to save jobs and create new ones.”

A crucial lever in the plan includes cutting the main rate of VAT from 23pc to 21pc which will take place from September this year until February 2021.

Also crucial is the decision to extend the temporary wage subsidy to April next year but in a different shape that will involve lower payment rates to employers but will include newly hired staff as well as hiring of seasonal workers.

A help-to-buy scheme will provide home buyers with tax relief of €30,000, an increase of €10,000.

To boost the tourism sector, a “staycation” subsidy will allow people who spend €625 to claim back an income tax credit worth €125.

The July Stimulus can be broken down under four headings: Backing Ireland’s Businesses, Getting People Back to Work, Investing in Communities and Building the Economy of The Future:

1. Backing Ireland’s Businesses

To sustain and grow Irish businesses, the measures include:

  • A new Employment Wage Support Scheme will succeed the Temporary Wage Subsidy Scheme, and run until April 2021.
  • 0pc interest for first year of SME loans
  • Restart Grant for Enterprises is being extended and expanded.
  • The waiver of commercial rates extended until end-September 2020
  • A €2bn Covid-19 Credit Guarantee Scheme,
  • other business finance measures, including supports for start-ups

2. Getting People Back to Work

In terms of sustaining employment and getting people back to work, especially young people, the measures include:

  • Extension of the Pandemic Unemployment Payment (PUP) to 1st April 2021
  • €200m investment in training, skills development, work placement schemes, recruitment subsidies, and job search and assistance measures
  • 35,000 extra places will be provided in further and higher education.
  • Further supports for apprenticeships

3. Investing in Communities

To help communities – especially regional towns and villages – to recover from the ravages of the pandemic, the measures include:

  • Financial Certainty through the Enterprise Wage Support Scheme, the Pandemic Unemployment Scheme, Rates waivers etc.
  • €500 million investment in communities
  • Investment in schools, walking, cycling, public transport, home retrofitting, and town & village renewal
  • Tax measures including a temporary reduction in the standard rate of VAT
  • Stay and Spend initiative
  • Targeted measures for most vulnerable sectors

4. Building the economy of the future

To maintain Ireland’s edge as an innovative, forward-looking nation, the measures include:

  • €25m Investment in Life Sciences
  • Training and Skills Development
  • €10 million to be provided under a New Green Enterprise Fund
  • Increase in Seed and Venture Capital for innovation driving enterprises
  • Additional supports for IDA promotional and marketing initiatives targeting jobs
  • Additional supports to businesses to develop their online presence.
  • €20 million Brexit fund to help SMEs to prepare for new customs arrangements
  • Expansion of Sustaining Enterprise Fund scheme

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

Published: 24 July, 2020

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