Recurring Covid restrictions will kill off many viable businesses

Most of the economy is open, the schools are open and the health service is operational. The price is social restrictions on hospitality. Restrictions that will drive many bar and restaurant businesses to the wall.

Whether you agree with this trade-off is immaterial; it's what the Government, guided by the National Public Health Emergency Team (NPHET), has decided is necessary and in the public interest. And there are two reasons, outside of the perceived link between hospitality and Covid-19 and the recent pick-up in cases, why this is unlikely to change.

Back in June, the outgoing government gave in to heavy lobbying from business to fast-track the unwinding of restrictions, particularly for hospitality, a process it now regrets and blames for the current upsurge in cases.

Another six months of restrictions is wipeout territory for many family-run operations

The other reason is that the opinion polls consistently indicate strong public support for restrictions and for a more cautious, health-focused approach generally.

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Acting chief medical officer Dr Ronan Glynn didn't sugar coat it when he warned on Monday that there was no "going back to normal" after the current surge in cases has been handled.

“We have to be honest. We’re not going to have a vaccine, we’re not going to have a treatment, we’re not going to have any significant game changer for the next six months and the Government plan reflects that we have to live with this for the next six to nine months,” he said.

Death knell

His words may have sounded the death knell for many struggling hospitality businesses, which thought they had emerged from the worst of it. Another six months of restrictions is wipeout territory for many family-run operations.

“I don’t have the words to describe how bleak the scene is in the Dublin pub trade,” Donall O’Keeffe, chief executive of the Dublin-based Licensed Vintners’ Association (LVA), said.

Wet pubs in the capital, which account for a third of the city’s 750 establishments, have been closed since March 15th. “200 days of no trade, no income, no turnover...you don’t have to be an economist to understand what that does to a business and its staff.”

The reimposition of restrictions in Dublin saw the number of people in receipt of the Government's PUP rise by 10,000 in just one week

O’Keeffe says the LVA is aware of 12 Dublin pubs that won’t reopen but he suspects the actual figure is and will be much higher. The ending of mortgage breaks this month, which were availed of by the majority of pub businesses, according to O’Keeffe, is another aggravating factor.

Hotel bookings, which had crept back up, have also collapsed again in the wake of renewed restrictions in Dublin and elsewhere, with up to 88 per cent of hotel rooms nationally expected to lie empty in November, according to a survey by the Irish Hotels Federation.

The reimposition of restrictions in Dublin saw the number of people in receipt of the Government’s pandemic unemployment payment (PUP) rise by 10,000 in just one week.

There are persuasive arguments that NPHET’s singular focus on defeating Covid needs to be better balanced with other national objectives such as cancer detection, education and jobs, all of which have been put on the back burner during the crisis.

Second wave

This is reinforced by the fact we’re getting lower hospital admissions and fewer deaths in the second wave, albeit health officials warn this could be temporary.

A more balanced approach, however, implies more nuanced interventions and fewer blanket restrictions. As yet, no one seems to have an idea what that would look like.

Governments in Ireland and elsewhere have failed to use the time bought under the first lockdown to prepare for the next wave, to put in place a robust testing and tracing regime that might have allowed us to be quicker at detecting and putting out the fires as they occur.

Adherence to the rules here is becoming increasingly problematic as fatigue and irritation set in

Most of the economic modelling done back in April and May seems to have been predicated on the lockdown lasting for three months or marginally longer: no one seems to have banked on this messy in-between of in-and-out restrictions.

David Nabarro, a World Health Organisation special envoy on coronavirus, told the BBC's Today programme on Tuesday that governments would not defeat coronavirus just by imposing ever-stricter rules. What mattered was getting people to comply with social distancing voluntarily, he said.

“This war, and I think it’s reasonable to call it a war, against this virus, which is going to go on for the foreseeable future, is not going to be won by creating tougher and tougher rules that attempt to control people’s behaviour,” he said.

“The only way that we will come out ahead of this virus is if we’re all able to do the right thing in the right place at the right time because we choose to do it,” he said.

Fatigue and irritation

Adherence to the rules here is becoming increasingly problematic as fatigue and irritation sets in. When financial hardship is added to the mix – as it inevitably will be when the Government starts weaning businesses and workers off wage supports – the situation could get a whole lot worse.

It's nine months since authorities in China announced that there was a cluster of pneumonia cases with an unknown cause in the city of Wuhan. The first recorded death, that of a 61-year-old man in a hospital in the city, came 12 days later.

On Tuesday, we had confirmation that the global death toll from Covid-19 has now eclipsed one million. The figure most likely underestimates the true death toll as many countries are under-reporting incidence.

Among the very few bright spots in the equation are the Government’s financial capacity to be able to support workers and therefore the economy for an extended period, the resilience of the export sector, and the seemingly strong consumer spending metrics that will fuel recovery once the crisis lifts. We hope.