The Irish economic recovery will be halted again following the arrival of the second wave of COVID-19 before recovering from the first recession.
Since the COVID-19 outbreak last March, Ireland has been experiencing a recession. But the Irish government has been trying to recover from it since September. In the meantime, the second wave of COVID-19 hit Ireland. And now, Level 5 restrictions were re-imposed in the country. Therefore, Ireland will still have to wait to recover from the first recession.
But this concern is not unique to Ireland. There are now concerns of a double-dip recession across Europe.
The economic losses are not only from the immediate impact of restrictions, but also from significant, and widely affect financial confidence.
The Irish government has decided to take on high financial costs for a short period of time in the hope that the virus will be significantly reduced by December.
The fact is that the faster the virus spreads, the greater the financial and health risks. The level 5 restrictions currently in place are, however, better than increasing the restrictions later.
However, with most of the economy shutting down again, the government is posing a challenge to the economy.
By 2021, the country is moving into a period in which large sections of the economy will continue to open and close. This has a huge impact on customers and business confidence.
If we are waiting for a vaccine, the risks are clear, but confidence will be weak until a vaccine appears. Consumer spending will be affected as well as business investment.
The restrictions imposed in Ireland appear to be stricter than elsewhere in Europe. People going back on to the pandemic unemployment payment (PUP) will have an immediate impact. Already, the youth unemployment rate is approaching 40%.
According to official figures, more than 150,000 people can now return to PUP. The cost to the exchequer of the six-week restrictions is likely to be around €1.5 billion in total. The PUP rose from 220,000 to 250,000 in the recent weeks, and could go back to 400,000.