Government must hold its nerve on borrowing as it reboots economy

Merits of appeals from businesses for funds will need to be scrutinised closely

A man walks past a window display at the National Wax Museum Plus in Dublin, which has reopened following the easing of lockdown restrictions. Photograph: Niall Carson/PA Wire

A man walks past a window display at the National Wax Museum Plus in Dublin, which has reopened following the easing of lockdown restrictions. Photograph: Niall Carson/PA Wire

With Ireland’s success to date in bringing the outbreak of infection down to a low level, and the rapid bounce-back in economic activity now in progress, an optimistic tone has begun to emerge in some commentary. Nevertheless, and despite the potential for some good news on vaccines and treatment, most forecasts do not predict a return to last year’s level of employment and aggregate income before 2023.

The large defensive spending measures that have already been undertaken by government to meet the jump in healthcare costs, to subsidise wages and to provide financial support to those who lost jobs, will have to continue for some time. In addition, the new Government will soon have to embark on a second wave of spending to support recovery and repositioning of the economy, with an announcement due shortly as part of what is being called the July stimulus.

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