Backing business will help us win
AS the country faces an unprecedented set of challenges in the six to 12 months ahead, Budget 2021 represents a sound footing from which to meet those tests, namely the growing Covid-19 crisis and the still-avoidable threat of a no-deal Brexit. For good measure, and after a shaky start, the Budget should also allow the Government space to draw a line under events that have bedevilled it since the outset and focus on those challenges ahead.
The total Budget package announced was €17.8bn, making it the largest in the history of the State. Of the total package, €14.6bn was already pre-committed to spending arising from Covid-19 supports and policy decisions taken in previous years. These are massive sums, unimaginable at any other time. But we live in extraordinary times.
It is to be welcomed that there has not been a return to the fiscal austerity budgets of previous years. However, as the public know well at this stage, there is no such thing as free money. While the decision was a good one to borrow and spend huge sums — up to €40bn over the next two years — that money will still have to be repaid. Interest rates are favourably low at the moment but the deficit will be approaching an eye-watering €200bn by 2023. So this level of spending can not continue. It is, therefore, vitally important that value for money is achieved.
In the battle against Covid-19, it is also crucial that the country’s small- and medium-sized enterprises are given every opportunity to survive. These businesses and companies represent the backbone of the economy. In recent months they have been fighting an uphill battle against the coronavirus. In July, the Government introduced various stimulus measures to help them — such as a wage subsidy scheme, restart grants, a commercial rates waiver, and a €2bn Covid-19 credit guarantee scheme.
These measures have been retained and further measures announced in the Budget, including a most welcome reduction in the VAT rate for the hospitality and tourism sector from 13.5pc to 9pc.
As the country faces into the challenges ahead, these measures should go a long way towards giving small businesses a fighting chance of survival. There is no sector of the economy more determined to meet the challenges head-on, and none working more in tandem with society as a whole.
It is at this coalface that the greatest threat to employment exists. Already many people have been let go or are barely hanging on. The Government must do its best to protect these enterprises going forward.
However, the size of the Budget investment must yield long-term benefit as well. Not all businesses will survive, not all employees will have a job to return to. Part of the solution in this period must be to facilitate the retraining of workers to avoid the prospect of long-term unemployment. In this regard, the Government has also announced a range of measures, including €120m to reskill and upskill people affected by the pandemic, as well as enhanced educational and apprenticeship schemes. These measures are also welcomed.
It is now most important that the Government maintains its sense of purpose and cohesion going forward for it will be needed in ways we may yet have unimagined.