Economics professor Tony Foley has questioned why the ‘staycation voucher’ included in the July stimulus plan, which is set to be revealed on Thursday, will not commence until October.
The senior lecturer and head of the economics finance and entrepreneurship group in DCU’s Business School told RTÉ radio’s Today with Sarah McInerney show that he thought the initiative to support the domestic hotel and restaurant sector should have commenced immediately.
Later on Thursday the Government will announce its long-awaited stimulus plan, with a package of about €7 billion to include capital spending, welfare and employment supports, grants and tax cuts.
Under the ‘staycation voucher’ scheme consumers will be able to claim a tax refund of up to €125 when they spend in the region of €600 on accommodation, food or non-alcoholic drinks.
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Prof Foley pointed out that last year 20 million bed nights were from overseas visitors while the domestic market was eight million. Any development of the home industry is not going to make up for the loss of foreign visitors, he said.
“But it will be a boost.”
The stimulus package is the first step of many that will be required to help the economy. Many measures will be required to keep the economy and the country “ticking over” he said, but the country is still going to be left “with major problems.”
A main element of the stimulus package will be the announcement of new employment supports based on the German “kurzarbeit” scheme, under which the State supports the wages of workers who have been temporarily put on short-time working. It has been credited with keeping unemployment low during the pandemic, and during the financial crisis a decade ago.
The plan will include a huge injection of cash to revive the stricken economy through capital spending and grants, as well as a series of schemes to support businesses and workers.
However according to Prof Foley the country will never pay back the debt caused by Covid-19, the real problem will be in five years when there is an increase in interest rates. At the moment no country in Europe is worrying about borrowing, he said.
“These are strange times that require strange responses.”