Economy

Caution needed to ensure coronavirus supports are fair

Cantillon: Conflicts could arise over which businesses are more deserving of State help

Tourists wearing respiratory masks at the Coliseum in Rome. Photograph: Getty Images

Sat Mar 7 2020 - 01:00

As the State comes to terms with the spread of coronavirus, business supports may just be what the doctor ordered. But not, however, on a free-for-all basis.

From banks offering a helping hand with cash flow to the Department of Business saying it will examine the options for companies affected by the coronavirus outbreak, the great and the good of Irish business may yet escape this period unscathed.

This is right as, at the best of times, business is an uncertain pursuit. But in this time of heightened panic, the State must consider the likelihood that in some cases, supports may prove useless and in other cases totally inappropriate.

For example, what happens when cinema groups come under pressure when picture-goers avoid mass gatherings and production houses pull films from the market? There’s a good argument that supports should be provided to help them weather the storm. But if that is the case, does that mean that some of the new and struggling arrivals in the crowded restaurant sector should also get a bailout when bums disappear from seats?

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Global ties

Or what of those companies whose fortunes are even more tied to those of the global economy? Manufacturers importing components from China will clearly struggle to make ends meet as they fail to bring supply to their customers, which in turn means money won't be coming through the door.

And perhaps they deserve State assistance, but that probably shouldn’t extend to factories or manufacturers which haven’t themselves invested in their facilities or modernised their offerings while the economy was booming for the past few years.

The question those conflicts raise is whether the State can discriminate in favour of businesses who will survive – and thrive – in the post-coronavirus era. Would it be best, then, for it to stand aside in favour of the survival-of-the-fittest approach?

Whatever it decides, the State must avoid propping up weak businesses.

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