Governments agree support packages as the world plots a route through the pandemic

This evening’s main points for business as restrictions increase and Ireland adds to its economic measures

By Philip Connolly Editor, Fora
IN THIS TURBULENT time, Fora is going to bring you updates every morning and evening on the most relevant issues for Irish business dealing with the outbreak of Covid-19. Here are the main points this morning, March 25 at 5:30 pm. We want to know how your business is dealing with the outbreak, drop us a line at

With severe restrictions hitting businesses as Covid-19 continues to spread around Europe and the US, governments are trying to deal with the economic impact. 

European stock markets jumped on Wednesday, building on the previous session’s huge gains, as governments and central banks attempt to prop up a global economy ravaged by the virus.

Across the pond, the US Senate and the White House have reached a deal on a €1.85 trillion stimulus package for the US economy and the millions of Americans impacted by the coronavirus crisis.

Markets on the rise

  • Ireland’s ISEQ was up by more than 5% this morning, before falling back a little to close at a gain of 3.95%;
  • London’s FTSE 100 closed up by 4.4%; 
  • Europe’s Stoxx 50 was up by 3.1%

The world’s 20 most industrialised countries will likely suffer a recession this year because of the COVID-19 pandemic, the financial ratings agency Moody’s forecasted earlier today. It estimated that the G20′s overall gross domestic product would contract by 0.5%, with the US economy shrinking by 2% and the eurozone by 2.2%.

Retail woes 

As economies limit activity, retailers must prepare to navigate a period of elevated risks to cash flow and increased operational costs arising from a slump in consumer demand and disruption to supply chains. This is according to Stephen Murray, a senior director at retail real estate consultancy JLL.

“The immediate impacts for retailers with closed high street and shopping centre locations are requests for temporary suspension or deferral of rent and other lease obligations. The government have already confirmed a deferral of the liability to pay local authority rates, initially up until May 2020,” he said. 

With stores shuttering up due to declining trade, temporary staff were already being laid off before the state-imposed shop closures. Because of this, the effects of social distancing have been felt immediately in all retail sectors other than grocery, pharmacy, home improvement and essential services. 

“Certain occupiers anticipate that the recovery phase may not occur in all stores across portfolios, simultaneously if customer demand is depressed. Conversely, some other convenience led retailers are anticipating opportunity on improved commercial terms. Whilst many retailers are ‘feeling their way’ in the eye of the crisis, there will be a lot of focus on how the return to normality in the earliest affected markets plays out,” Murray added. 

In the short term, supply chain disruption could also lead to lower inventory levels for some retailers and may result in upward pressure on consumer prices. But much will depend on the retailer’s flexibility to source and manage stock, according to Murray. 

Unprecedented actions for an unprecedented emergency

Yesterday, the state announced an income support scheme to provide a safety net to Irish workers and companies affected by the crisis. The state’s support measures will be costly, with the bill estimated at €3.7 billion over 12 weeks. The measures include:

  • A temporary wage subsidy of 70% of take-home pay up to a maximum weekly tax-free amount of €410 per week to help affected companies keep paying their employees – the equivalent of €500 per week before tax;
  • Workers who have lost their jobs due to the crisis will receive an enhanced emergency Covid-19 Pandemic Unemployment Payment of €350 per week, an increase from the previously announced €203;
  • The Covid-19 illness payment will also be increased to €350 per week;
  • Self-employed people will also be eligible for the Covid-19 Pandemic Unemployment Payment of €350 directly from the Department of Employment Affairs and Social Protection, rather than the Revenue scheme);
  • There are also enhanced protections for people facing difficulties with their mortgages, rent or utility bills.

“The cost of this will be great,” Varadkar said, adding “we can bear it and we will be able to pay it back as a nation”.

According to analyst Ronan Dunphy of Investec, the introduction of the wage subsidy scheme was a “necessity in order to attempt to limit the second-round effects across the economy and leave the country better placed to bounce back once the public health crisis subsides”.

“The total cost of the measures announced yesterday amounts to €3.7bn but, particularly with the progress that has been made in strengthening the public finances in recent years, the country is well placed the fund the additional costs,” he added. 

Ireland is well placed to increase its borrowing activity in the coming years arising from the economic disruption relating to the Covid-19 pandemic, according to the National Treasury Management Agency (NTMA).

It said that additional borrowing will take place against a backdrop of a strong improvement in Ireland’s debt position in recent years. This has been reflected in a solid trend of lower borrowing costs, strong demand for Irish sovereign debt among international investors over a protracted period and ratings upgrades by each of the major credit rating agencies. 

“The strong progress Ireland has made improving its debt profile over the past five years leaves us well placed to address any borrowing challenges posed by the economic fallout of Covid-19,” Conor O’Kelly, the NTMA Chief Executive, said. 

“We have the benefit of strong international investor appetite for our debt and a supportive interest rate environment that is underpinned by favourable interventions of unprecedented scale by the ECB and other authorities,” he added. 

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Note: This piece will be updated with additional information during the day. With reporting from AFP