The ECB has done well, the EU has been poor and the Irish scoreboard is mixed one year after the Covid crisis

PASSING the one year anniversary of the Covid-linked Irish economy and society lockdown, it has been an extremely difficult year on many fronts. However, the damage to the economy, the national psyche and the lives of people has been immense.

At the time of writing, there have been around 4,715 Covid-related deaths in the Republic and 2,116 deaths in Northern Ireland. The legacy of the pandemic will last a long time to come.

There is a lot of criticism of how the government has handled the crisis over the past year, to which this author has contributed.

Some criticisms are justified, others less.

However, if we put ourselves in the shoes of the government, facing such an unprecedented crisis was always going to be a nightmare.

There is no real model available for dealing with such an unusual and dangerous situation. In many ways, this has been a case of learning as you go and largely a trial and error approach.

Of course, the dysfunctional healthcare system was totally unable to cope.

If it gives you any comfort, most governments around the world are being pilloried for their handling of the crisis and, in particular, for the management of the vaccine rollout.

The US and UK handled the initial health crisis very poorly, but these countries have dramatically reversed the situation with their handling of the vaccine rollout.

British Prime Minister Boris Johnson has handed over control to venture capital firm Kate Bingham, and the results have been spectacular.

The UK became the first country in the world to approve a Covid-19 vaccine for emergency use in early December and, according to the British medical journal, his health ministry began planning a mass vaccination program before the first infection was confirmed.

Mr Johnson has managed to turn his political fortunes in dramatic fashion and is definitely in the spotlight, right now.

In the United States, President Joe Biden has prioritized the vaccination program and is expected to experience spectacular success in his first 100 days in office. Indeed, my 32 year old nephew in California was contacted to make a vaccination appointment, while my 70 year old neighbor here did not hear a word.

Meanwhile, across the EU, the handling of Covid-19 itself has varied tremendously from country to country, as has the vaccination schedule –
although the latter is linked more to the incompetence of the EU than to the incompetence of individual countries.

Nonetheless, the responsibility for the vaccine rests on the shoulders of individual governments, with Emmanuel Macron, the French president, now appearing very vulnerable to the threat from the political right in France ahead of the presidential election in April next year.

The German Chancellor’s CDU party is in serious trouble ahead of the federal elections in September. The Financial Time made headlines this week citing a German business leader as saying ‘we’re the laughing stock’, while Angela Merkel launched an attack on the leaders of Germany’s 16 states for easing their lockdowns as infection rates were increasing.

Germany was said to have handled the crisis very well at the start, but that is only a distant memory.

In a nutshell, the management of Covid and the vaccination program is causing serious political ripples across the world, and it will be interesting to see how this could change the global political complexion over the next few years.

In contrast, the economic policy response to the crisis has been quite aggressive and coordinated.

The EU immediately eased tax and state aid rules, and essentially encouraged governments to borrow as much as needed to support households and businesses in the face of a severe crisis.

The European Central Bank (ECB) launched a € 1.9 billion bond buying program, or quantitative easing, which aimed to keep long-term interest rates low, thus facilitating massive borrowing by courses by EU governments.

This general policy response has been strong but, at the EU level itself, there has been a marked reluctance to implement the budgetary approach which is undoubtedly necessary.

As is always the case, the agreement on an EU bailout has been slow, laborious and, ultimately, insufficient. It is likely to be less than half that of the United States. As a result, the resumption of growth in the United States will far exceed that of the EU.

Overall, the ECB handled the crisis well, but the European Commission has been very disappointing at all stages, but particularly when it comes to the procurement and delivery of vaccines.

Commission President Ursula von der Leyen did not inspire confidence.

In Ireland, the government’s scoreboard appears mixed.

On the one hand, the government did not hesitate to borrow and ran up a big deficit.

Before the pandemic, it was expected that there would be a general government budget surplus of up to 2.5 billion euros in 2020. In this case, a deficit of almost 19.5 billion euros materialized.

The deficit this year could exceed € 20 billion, depending on how long strict restrictions remain in place.

The government quickly recognized that households would need to be supported and that the economic recovery would ultimately depend on having as many viable businesses as possible still there to pick up the pieces and stimulate the recovery.

The supports include the unemployment payment in the event of a pandemic, the wage subsidy for employment scheme (formerly the temporary wage subsidy scheme), a credit guarantee scheme, rate exemptions, business loans and various subsidies. . There have also been specific sectoral initiatives, such as for the tourism sector.

Many businesses affected by the restrictions in sectors such as hospitality, non-essential retail, private transportation and personal services, rightly argue that payments have not been enough to keep them going and to come back to life once the pandemic has passed in certain senses of the word.

Data collected by the European Commission suggests that in 2020 Ireland ranked last in the EU for the amount of state aid granted to businesses expressed as a percentage of GDP. Measured by GDP, he estimates that Ireland distributed the equivalent of 0.26% of GDP, compared to 7.3% in Spain and 6.4% in France. This despite the fact that the Oxford Austerity Index shows Ireland has had one of the most restrictive diets in the developed world over the past year.

Communications and leadership have been very poor in Ireland over the past year, but especially since the current government took office. Confusion, frustration and disillusion have been sown with conflicting messages, leaks, conflicting information, hesitation and the lack of a coherent strategy or direction for the tightly restricted sectors.

Government policy has been dictated by the National Public Health Emergency Team (Nphet), for the most part.

This organization has been given a very specific and limited mandate. Unfortunately, he was not required to take into account the economic, social and wider health consequences of a policy which was based on continuous and strict restrictions and nothing else.

Of course, the members of Nphet don’t contain anyone with an understanding even distant from business owners.

There has also been a dismal failure in implementing an appropriate system of testing, tracing and isolation, and rapid antigen testing. No consideration appears to have been given to the importance of ventilation either.

In addition, no proper attempt has been made to assess the various risks, for example, a person on the side of an isolated mountain or on a golf course being considered to be exposed to the same risks as a pub. . Thousands of people crammed into a public park are considered safer than two people on a golf course. It defies logic.

At the onset of the crisis, it seems clear that the health services were totally ill-equipped to deal with a pandemic and, therefore, the only viable option for the government appears to have been a continuing series of continued lockdowns until the end of the crisis. ‘a vaccine can be delivered.

Unfortunately, this is what we are living with now, and it will be for some time to come.

No attempt has been made to perform a cost benefit analysis of this approach.

The economic, fiscal, health and social legacy of the approach advocated by Nphet and generally accepted by the government will have repercussions in the years to come.

Hopefully some valuable lessons have been learned for the next health crisis, because the cost of failure is horrendous – as we are finding out.

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About Ethel Partin

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