Half measures to restart economy will no longer cut it – July Stimulus is last chance to ensure survival of vulnerable businesses

Chambers Ireland today (15 July 2020) publishes its recommendations to Government on the measures that will be necessary to protect jobs, prevent businesses from failing, and support the recovery.

Representing 40 Chambers, more than 8,000 businesses and with a geographic reach in all major cities, regions and towns, Chambers Ireland calls for Cabinet to use all resources available to reboot the economy.

Speaking today, Chambers Ireland Chief Executive Ian Talbot said,

“Measures introduced to date to support businesses to re-open have played a positive part in reducing some of the economic damage. In particular, the introduction of the TWSS 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.

Our series of surveys and research over the course of lockdown and the early stages of re-opening, show us how deeply COVID-19 has impacted local economies. Revenue of most businesses is about half of what it usually would be at this time of year.

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:

1. 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.
2. 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.
3. A new expansive model for grant aid so businesses can tackle the mounting costs of debt and outstanding invoices. 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.”

Further Notes

• Chambers Ireland COVID-19 Research and Data (March- June)

The findings of our most recent set of survey results, published in June towards the end of Phase 1, are synopsised as follows-

• Business activity levels are extremely low, for those businesses that have returned to operation under Phase 1
• 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 -60% to -50% over the next three months, so most businesses expect their earnings over the coming three months to be half the normal amount.
• 25% of businesses expect to have earnings that are -70% of their usual level
• The impact of revenue decline is being felt more strongly in the regions, notably in the West, Border counties and the South East
• Smaller operators have seen revenue reduced most significantly, again compounding regional effects for areas which do not have large employers
• Invoice arrears are increasing with the value of unpaid invoices (relative to the same period in 2019) significantly up across all sectors
• Almost two thirds of microenterprises and small businesses have experienced both an increase in the value owed to them and an increase in the proportion of debt that is owed to them that is now in excess of 90-days past due
• July Stimulus Recommendations
• July Stimulus Submissions to Government