An economist’s view: ‘All Covid waves are not equal’

The latest phase of the pandemic is being marked by increased concern globally about the rapidly rising prevalence of the Delta variant of Covid-19. Ireland is no different. Daily cases above 1,000 cases in recent days are being driven by the new, more transmissible variant. Tánaiste Leo Varadkar has talked about daily cases possibly reaching 4000 at their peak. That's the bad news.

Case numbers have tended to dominate the coverage of the pandemic in Ireland to date, sometimes in alarmist ways. One would be forgiven for believing we have been here before, with rising cases threatening to overburden the healthcare system, thus requiring an immediate tightening of restrictive measures to halt its spread. There is, however, much better news on the vaccine front that suggests we may have less to fear from this fourth wave and that the policy response can, and should, be different this time out.

The much-welcomed acceleration in the vaccine rollout ... has put Ireland in a much better position to cope with this latest wave

Ireland, along with the rest of the European Union, got off to a slow start in its vaccination programme, beset by supply delays, commercial spats and safety concerns. By the end of April, only 23 per cent of the population was either partially or fully vaccinated, compared to 51 per cent and 43 per cent in the UK and US, respectively. Tailwinds on supply over recent months has allowed the EU to close the gap with those two countries, with the speed of the rollout programme in Ireland over the past week being among the fastest in the world. Some 64 per cent of the total Irish population – and 80 per cent of the adult population – is now vaccinated at least once, ahead of the US at 56 per cent and just behind the UK (68 per cent).

Over 60,000 vaccinations per day were given over the past seven days. This is equivalent to 1.2 per cent of the Irish population each day, four times faster than the UK and eight times faster than the US in the same period. In fact, neither the UK nor US achieved the rates of vaccination that Ireland has recently achieved. The very low level of vaccine hesitancy in Ireland has played an important role. Suggestions at the start of the year that Ireland could vaccinate 440,000 people in a week would have been scoffed at. Yet, this has been done, and there has been very little fanfare. Credit where it is due.

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This has put Ireland in a much better position to avoid a repeat of the strain on the hospital system. The experience of other countries, most notably the UK, is instructive in this regard. The UK is roughly a month ahead of Ireland in this latest Delta-driven wave. Cases have ballooned, but there appears to a significant weakening in the relationship with hospitalisation two weeks later; the ratio of Covid patients relative to cases two weeks earlier is 80 per cent lower than it was at the start of the year. If the Tánaiste’s suggestion of a peak of 4,000 cases proves correct and the same relationship between cases and hospitalisation holds, Covid hospitalisations in Ireland may peak at about a third of that experienced at the start of the year.

The decision by the UK to remove most public health restrictions this week will also provide a real-life experiment of the potential worst-case scenario of increased social mixing. This should provide a powerful evidence base for the public health authorities here as to what approach to take next.

The point is not to downplay the impact of the disease. After all, I am not an epidemiologist or public health expert. It is simply to state that all Covid waves are not equal and there is a growing evidence that the vaccines are indeed effective in reducing serious illness and death.

The much-welcomed acceleration in the vaccine rollout, high take-up among the population and the cautious approach to reopening to date has put Ireland in a much better position to cope with this latest wave and, indeed, we should be able to look forward to reopening and recovery in the months ahead despite the expected further rise in cases in the coming weeks.

We should also be quite hopeful that the recovery from the pandemic can be quite swift, albeit differentiated across sectors. Helped by a robust performance from the multinational sector, the Irish economy has been the best performing in the world since the pandemic began. Domestic spending has performed in line with the average across Europe, but clearly there has been sectors that have been decimated.

Last September the Government published a plan for Ireland to “live with Covid”. The arrival of the third wave meant that those plans were quickly made redundant, with policy resorting to damaging lockdown.

With most of the world still largely unvaccinated, Covid will unfortunately remain a concern, posing issues in managing international travel. Government strategy has prioritised public health during the pandemic. Vaccines have been the key part of that plan and can allow a proper living-with-Covid strategy to be developed that allows the resumption of economic and social activity with appropriate safeguards and a shift in policy focus to medium-term plans to ensure that the economic rebound is a sustained one.

Dermot O’Leary is chief economist with Goodbody