Ireland extends main COVID-19 supports for firms, tapers others

Outbreak of the coronavirus disease (COVID-19) pandemic in Dublin
FILE PHOTO: A shuttered pub called Reilly's is seen closed due to Government restrictions around coronavirus, amid the coronavirus disease (COVID-19) pandemic, in Dublin, Ireland, September 3, 2020. Picture taken September 3, 2020. REUTERS/Clodagh Kilcoyne

June 1, 2021

By Padraic Halpin

DUBLIN (Reuters) -Ireland extended the main financial supports for firms hit hard by the COVID-19 pandemic on Tuesday and announced the first phasing out of other emergency measures, with coronavirus-related jobless payments to be tapered from September.

The government has propped up the economy with supports worth 38 billion euros ($46.46 billion), or nearly 20% of national income, having had one the strictest lockdown regimes in Europe for the last 15 months. Ireland is emerging from its third and longest shutdown.

Ministers agreed to extend commercial rates waivers until the end of September, continue to give grants to firms with significantly reduced turnover beyond that point and keep wage subsidies and tax debt warehousing going until the end of 2021.

The wage subsidy scheme, the costliest part of the package, will also likely be present in a different form in early 2022, Finance Minister Paschal Donohoe said.

Prime Minister Micheal Martin said the objective of the plan is to exceed pre-crisis employment levels by 2024.

Ireland’s unemployment rate was just below 5% when the pandemic began. The number of people temporarily or permanently out of work stood at 22.4% at the end April, with around three in four on the Pandemic Unemployment Payment (PUP).

Ministers said they expected that cohort to fall very significantly over the coming weeks as shops, restaurants, pubs and hotels reopen ahead of the phasing out of the PUP between September and February 2022.

The measures, which also include keeping a lower 9% VAT rate for the hospitality sector until September 2022, will increase Ireland’s budget deficit to close to 5.7% of gross domestic product (GDP) this year from 5% last year, Donohoe said.

Ireland also laid out how it will spend its 915 million euro portion of the EU’s 750 billion euro fund to help member states recover from the pandemic.

The money will be focused on Ireland’s green transition, including a low-cost loan scheme to retrofit homes and in retraining 100,000 people by 2025. The central bank has estimated this many people could lose their jobs permanently due to the pandemic.

($1 = 0.8180 euros)

(Reporting by Padraic Halpin; Editing by Nick Macfie, William Maclean)