Nothing off limits in Varadkar plan to stem coronavirus

Government will take on heaps more debt as it seeks to replace some of workers’ lost pay

An Taoiseach Leo Varadkar has announced a series of new measures - while also extending current restrictions until April 19th - in an attempt to combat the coronavirus pandemic. Video: RTÉ

 

The Government unveiled two major initiatives on Tuesday in the nothing-is-off-limits struggle to tackle the coronavirsus.

One is economic, to ameliorate the fallout from the suspension of most commerce in the State, and one is social, applying further restrictions to citizens’ movements in order to retard the spread of the disease.

Both are, in any normal context, breathtaking in their reach. The truth is that both may have to be revisited in the weeks and months ahead if the virus hits harder and for longer than the Government hopes.

Other parties quickly assented to the package. Politicians, of course, cannot stop being politicians and they are all wondering how this will play out in the medium and the long term; Fianna Fáil especially can see how Varadkar is rebuilding his political capital through the crisis and frets about the effectively suspended process of government formation; but they also know they can do absolutely nothing about it. A time of crisis is a time for executive action, not Opposition perspectives.

The truth is that while the Government naturally wants to keep them all onside, the Opposition will accept more or less anything the Government does. Normal politics, like so much else, is now in abeyance.

Desperate times, desperate measures. Like its counterparts across the world, the Irish Government will take on heaps more debt as it seeks to replace some of the income workers have lost, while also trying to keep companies going through wage subsidies.

The objective is not just to ease worries and hardship among businesses affected and people who have lost, and will lose, their jobs. The intention is to keep the economy ready to rebound when the crisis eventually comes to an end.

Cost rocketing

Tuesday’s package will cost nearly €4 billion; the Government is prepared for another €4 billion if needs be. The total cost of the coronavirus crisis – welfare, wage supports, increased health spending, tax receipts lost – is now rocketing far beyond the €10 billion that Government insiders were estimating only last week.

The measures are for three months – until the beginning of the summer. What if the virus continues to rage then? We will do it again for another three months, says one person at the heart of the administration: whatever it takes.

But what then? The National Treasury Management Agency has assured the Government that there are “no constraints” on its capacity to borrow money on the markets. But if the crisis is a prolonged one, that will not be true forever. No country can keep ramping up its borrowing indefinitely without the bond markets taking notice.

If the crisis doesn’t pass in the coming months, the Government’s ability to throw money at the situation will be diminished, and ultimately exhausted. That is inevitable.

The second element of Tuesday’s measures – greater restrictions on social interactions and on commerce – are similarly based on some evidence, but also on hope. Social distancing is working – chief medical officer Tony Holohan said that the average number of close contacts among those with the virus has dropped from 20 to five – but the truth is that neither politicians nor scientists know if it’s working quickly enough. The big surge of cases has yet to hit the hospitals.

No unnecessary travel

So all non-essential businesses are now being told to close, and people are being asked to stay indoors, allowed out for vital trips and for exercise. Gardaí will become more muscular with those not observing social distancing in public. The Government abhors the term lockdown, but this is certainly the greatest shutdown of commercial and social life the country has ever seen.

The day after the UK government announced a sweeping shutdown – piling political pressure on the Government here to follow – Varadkar and his Ministers haven’t quite gone the full Boris, but it’s pretty close.

Within Government there has always been significant concern about the long-term sustainability of a general shutdown. At the same time, it was a stage they knew we were likely to reach. The silent fear many have is that there aren’t many more shots left in the locker.

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