Leo Varadkar's speech from Washington on the Covid-19 coronavirus this week could hardly have been more dramatic if US president Donald Trump had invited him to deliver it from the Resolute Desk in the nearby Oval Office.
“We have not witnessed a pandemic of this nature in living memory,” the Taoiseach said, before ordering the closure of all Irish schools, colleges, childcare facilities and cultural institutions, as well as advising people to limit social interactions and avoid large gatherings.
“We will prevail,” he concluded. That this even needed to be said was alarming, but there was general consensus that it was good to see the Government taking strong, decisive action, even if it will mean enormous disruption to public life.
It seems like a long time ago now, but the week began with 500,000 people still expected to descend on Dublin for the St Patrick’s Day parade. That was axed, along with all other festivities, dealing the tourism and hospitality sector a hammer blow.
Financial markets were already in meltdown as global stocks plunged the most since the height of the 2008 financial crisis, with fears over Covid-19 exacerbated by a 30 per cent drop in oil prices after Saudi Arabia sharply escalated its price war with Russia.
The Iseq in Dublin, pan-European Stoxx 600 and S&P 500, which had been on the longest bull run in history, all slumped into bear territory, which is when overwhelming pessimism drives a market down more than 20 per cent in a short period.
European companies have lost about €2.7 trillion in value since fears of the economic damage from the pandemic sparked a worldwide sell-off last month. Meanwhile, trading on Wall Street was halted for 15 minutes on Monday and Thursday to try to stem the slide.
The effect of the coronavirus on companies dependent on tourism became clear. Ryanair and Aer Lingus cancelled all flights in and out of Italy until next month, while Norwegian Air said it would have to cut thousands of flights and lay off half its workforce. British Airways was also sounding warnings yesterday.
‘Use it or lose it’ rule
As airlines around the world sank deeper into crisis, the European Commission tried to ease the pressure by moving to suspend the “use it or lose it” rule whereby airlines must operate at least 80 per cent of their allocated airport slots or lose them.
The airlines then took another hit as Trump continued his scattergun approach to the crisis with a travel ban on Europe with the exception of Ireland and Britain. Analysts predicted the move would decimate tourism and push the euro area into recession.
At home, shares in Dalata, Ireland's largest hotel operator, fell almost 10 per cent to their lowest in five years, while Cineworld, the world's second biggest cinema chain, said the virus could render it unable to pay its debts and continue trading.
To tackle the crisis, the Government announced a €3.1 billion stimulus package, which was one of the biggest per-capita spends of any country, amounting to almost €630 per person. It included more than €400 million in measures for businesses.
Additional spending
The additional spending, which dwarfed recent budgets, means the expected surplus in the public finances this year – designed to act as a buffer against a hard Brexit – will be wiped out.
Following Varadkar’s speech in Washington, in which he also advised people to work from home where possible, mobile phone networks experienced service interruptions that included calls not connecting as well as slow or non-existent data connections.
Despite pleas from the Government and retailers not to “panic buy”, shoppers flooded supermarkets with photographs and videos of empty shelves and long queues dominated social media channels. Retail Excellence moved to reassure people that shelves would be restocked, and pointed out that the industry had “never been more prepared” having been planning for the possibility of a hard Brexit over the past number of months.
Irish banks, meanwhile, said they will offer relief, including short payment holidays on mortgages, to customers that find themselves in financial distress as a result of the coronavirus.
That was after Italy, Europe’s ground zero for the pandemic, suspended the need to pay bills, taxes and mortgages in order to ease pressure on small firms and households. The whole of Italy is under lockdown until next month.
Analysts also said the Central Bank was coming under mounting pressure to allow banks to tap capital reserves set aside for a “rainy day” to allow them to continue to lend during the crisis.
At European level, ECB president Christine Lagarde called on governments to launch an "ambitious and co-ordinated" financial response, while the European Investment Bank said it would announce a package of measures to help businesses next week.
Banks back in the dock
All other news may have paled into insignificance this week, but a new report from the Central Bank identified a number of key risks to consumers of financial services in Ireland, including the continued “lack of a consumer- focused culture”.
Separately, AIB announced plans to increase its fees for personal banking customers from the end of May, introducing transaction charges for contactless payments and removing the option of fee-free banking for many customers.
In a letter to customers, the bank said it would begin charging a quarterly maintenance fee of €4.50 to customers, with a 1c charge per contactless transaction. Taking cash out from an ATM will cost 35c, and over-the- counter transactions will cost 39c.
Finally, Bank of Ireland took the lead among Irish companies by publishing its gender pay gap findings, but they didn't make for great reading with the number of men in senior roles blamed for a disparity of almost 25 per cent.
