Ibec seeks €15bn ‘reboot’ of Irish economy

Employers’ group Ibec has called for a €15 billion reboot of the Irish economy to curb the effects of coronavirus and address some of the State’s major structural challenges.

The group's plan for relaunching the economy in the wake of the pandemic calls for an extension of the Government's wage subsidy scheme, enhanced spending on the National Development Plan (NDP) with the acceleration of several key projects, and greater liquidity supports for impacted businesses.

At its core is a €15 billion “reboot plan” to be rolled out within the first 100 days of the next government taking office.

Ibec said the economy’s automatic stabilisers – the reduction in tax and increase in welfare payment that naturally occurs in a downturn – would offset about 30 per cent of the decline in national income caused by the Covid-19 crisis.

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However, the remaining 70 per cent, or €20 billion, needs to be delivered through a stimulus package, it added.

This would involve new measures of about €15 billion, in addition to supports already announced by Government.

Ibec’s blueprint for restarting the economy , which is informed by a survey of more than 550 chief executives, calls for a three-month extension of the Government’s wage subsidy scheme, bringing it to the middle of October. The group has costed this at €3.5 billion.

The support programme, which pays up to 85 per cent of employees' take-home pay up to a maximum of €410 a week, is due to run out in mid June but Minister for Finance Paschal Donohoe has signalled he intends to extend it, albeit with tweaks.

Ibec said the emergency scheme needs to be continued beyond the initial operational period particularly for the tourism, hospitality and leisure sectors which it said would endure greater hardship than other industries.

The plan also called for businesses in these sectors to be given a full exemption of 2020 commercial rates and for the reintroduction of the reduced 9 per cent VAT rate for the hospitality sector.

In addition, Ibec’s stimulus programme includes an additional €25 billion in spending on the NDP, the Government’s €116 billion strategic development and climate emergency plan, which runs to 2027.

Living wage

As part of this, it wants several high-profile projects already in the pipeline, including the €2 billion DART interconnector (or DART underground) plan for Dublin, to be fast-tracked.

The plan, to be implemented in three phases up to the end of 2023, also includes an additional €400 million in spending on higher education and says there should be no increase in the national minimum wage and no adoption of the living wage until there was greater clarity around the impact of Covid-19 and Brexit.

“The Covid-19 pandemic is a truly seminal moment in our lives, posing enormous challenges to the way humanity has organised itself over recent decades,” Ibec chief executive Danny McCoy said.

"As a society, the response in Ireland has been exemplary.The economic response to date from Government has also been impressive, particularly in providing strong income supports for impacted workers, but much more will need to be done to address the economic impact of the crisis," he said.

“We are, however, only in the first phase of the crisis. While economic dislocation has been sudden, its full impact has not yet been felt and is likely to last for years. Disruption and change are unavoidable,” Mr McCoy said.

“Even before this crisis, Ireland was facing systemic economic and societal issues such as Brexit, climate change and a housing crisis,” he said.