Vaccine rollout is now key to reopening the economy
Cantillon: New health advice on AstraZeneca has implications for lives and livelihoods
Temple Bar in Dublin’s city centre on Monday. Businesses want to reopen – and be able to stay that way. Photograph: Gareth Chaney/Collins
Vaccine policy is primarily concerned with public health. But it is also the vital factor now for reopening the economy. The recalibration of the vaccine programme with the new public health advice on AstraZeneca has vital implications for lives but also for livelihoods. Time is short if significant parts of the economy are to be reopened for the summer, though the better news is the evidence of the powerful impact of the vaccines once delivered into arms.
The latest economic forecasts from the Department of Finance, to be published in the so-called Stability Programme Update (SPU) this week, are likely to reflect this key issue. Businesses want to reopen – and be able to stay that way. Experience in other countries like the UK, US and Israel is likely to give indications on the protection levels as more and more people are vaccinated and economies reopen in a staged fashion.
The updated Department of Finance forecasts will presumably be based on an economic rebound in the second half of this year. Given tax revenue trends so far, this may even allow a small reduction in the forecast deficit – on an EU basis – to below €20 billion. But with spending being pushed up by the prolonged lockdown, the exchequer finances remain under pressure and presumably additional spending to combat the economic impact of the pandemic will need to be voted through the Dáil in some kind of summer package.
By then, the Government hopes it will be able to forecast with a bit more confidence and we are likely to see a wider economic plan The SPU will be a more technical document, based on no major policy change. But it will still give an insight into official thinking on how the economy may rebound and what this will mean for borrowing. Politically, the key goal will be to avoid having to implement tax hikes or spending rises as we exit the pandemic – letting growth do the job of cutting borrowing from 2022 on. The quicker vaccines get out, the greater the chance that this can happen.