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Twin threats of Covid-19 and Brexit mean the economy is 'not yet ready to carry itself', Ibec warns

Ibec outlined measures it sees as central to supporting businesses and the economy over the coming year.

File photo. Shoppers on Dublin's Grafton Street at the weekend.
File photo. Shoppers on Dublin's Grafton Street at the weekend.
Image: Leah Farrell/Rollingnews.ie

EMPLOYERS GROUP Ibec has called on the Government to introduce measures to tackle youth unemployment, as well as preparing for the fallout of a possible no-deal Brexit, in its pre-Budget 2021 submission.

The group outlined a number of measures it sees as central to supporting businesses and the economy over the coming year, including the establishment of Covid-19 employment supports beyond April 2020 when the Employment Wage Subsidy Scheme is due to finish. 

It specifically called for tax measures to encourage investment in and by SMEs and improvements to the existing Employment Wage Subsidy Scheme (EWSS) “so that firms avoid a ‘cliff-edge’ effect once they hit 70% of normal turnover”.

As the Brexit saga rumbles on this week with British Prime Minister Boris Johnson trying to renege on the Withdrawal Agreement he signed off on last year, Ibec has insisted the Government must further Brexit proof Ireland in the event the UK leaves the EU without a deal. 

In its submission, it called for “a suite of measures including expanding the EWSS to Brexit impacted companies, introducing State-backed export credit insurance, and direct supports for export promotion and critical investment”.

In terms of the recent increase in employment as a result of the public health crisis, Ibec is asking for “supports focused  on youth unemployment and severely impacted regions” and “funding for activation and hiring schemes, such as JobsPlus, until unemployment falls below 6% and €400m to increase funding for, and recapitalise, higher education”.

The total cost of the measures proposed is thought to be around €6 billion, Ibec said. 

Ibec Director of Policy and Public Affairs, Fergal O’Brien said: “The scale of the challenge facing us from both Covid-19 and Brexit means that the economy will need ongoing support in 2021.

“The significant, but temporary, income supports currently in place are providing life support to many sectors and jobs across the economy.

“The Government has provided €20 billion in direct support to the economy in 2020. As those supports are withdrawn, in the first half of 2021, it is important that they are not all withdrawn at once. The economy is not yet ready to carry itself.”

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Many sectors are continuing to struggle back to their feet following the prolonged national lockdown earlier this year. 

The hospitality sector has been one of those worst-hit and yesterday expressed concern after the reopening of so-called wet pubs in Dublin was postponed once again. 

O’Brien added: “This new set of economic supports should be based around a comprehensive and targeted Covid recovery package for the worst impacted sectors and a clear plan to help protect sectors worst exposed to a difficult Brexit.

“The domestic unemployment crisis will require significant further measures to incentivise hiring and investment to get people back to work along with a policy package to ensure our export model is primed to deliver strong export growth in the years ahead.”

With reporting from Sean Murray

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