Extraordinary times and extraordinary measures. The income support arrangements announced by the Government are a massive package, aimed at supporting the earnings of those made redundant while, crucially, trying to keep people linked to their employers. The hope is that this will make it easier for the economy to restart when the crisis is past.
The risk, of course, is that we do not know how effective the efforts to control the virus will have been in 12 weeks time,when the measures are due to expire. But every government in every country is in the same boat – as is every business – and the Government has made the right move in trying to limit the damage.
The speed with which it has acted is also commendable. Up to 800,000 people could avail of the various schemes on offer, at a cost to the exchequer of €3.7 billion. The figures are breath-taking and the complexities immense. Inevitably some of the detail will take time to work through. But for thousands of businesses and tens of thousands of employees, tangible support will be provided over the next three months, with the hope that some time after that at least some of the restrictions on normal activitity will ease.
Complete fairness is impossible but the package tries to support those who have already lost their jobs, employees whose jobs or incomes are now under threat and the self-employed. Unfortunately we will emerge from this crisis with much higher unemployment and presumably many will revert in time to standard unemployment payments. Whether some extensions to the new arrangements may be needed is a question for another day. But we must hope many people will be able return to work when the crisis is past.
The sums of money involved are enormous and the outlook for the exchequer finances is transformed. Tough choices lie ahead as a result. For now, the exchequer has plenty of cash and the support of the European Central Bank to bond markets should ensure that borrowing rates remain low, for now anyway.We have seen before how quickly the market can turn but if the crisis can be contained within a few months, financing the measures announced, and other emergency supports, should be manageable. If the crisis drags on, this will pose a big question for exchequers across the world – and financing some kind of recovery in time is also a major issue.
For now the Government is ploughing on in the face of these uncertainties and correctly prioritising social solidarity. The economy will not reopen when this is over in exactly the same form as it closed. But that too is for another day. From the public finances, to universal access to health care, and to ever tighter restrictions on personal movement, what would once have been deemed impossible is now seen as essential as the politics of orthodoxy is abandoned in extremis.