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Donohoe has 'little reason to doubt' Covid-19 will cause worst economic crisis since Great Depression

The Finance Minister said Ireland will likely have to access some of the financial supports made available by the EU.

Finance Minister Paschal Donohoe (file photo).
Finance Minister Paschal Donohoe (file photo).
Image: Leon Farrell/RollingNews.ie

FINANCE MINISTER PASCHAL Donohoe said he has “little reason to doubt” the recession caused by the Covid-19 pandemic will be the worst global economic crisis since the Great Depression of the 1930s.

IMF chief Kristalina Georgieva yesterday predicted that 2021 would only see a partial recovery as countries all over the world deal with the impact of the pandemic.

Speaking on RTÉ’s Morning Ireland, Donohoe said: “I’ve little reason to doubt what the IMF have said, and the reason for that is because this virus is global in nature. The economic impact, tragically, will also be global in nature.”

Donohoe said previous economic crises were different to the current situation because of “the huge speed with which this change has happened”.

He said he is confident Ireland will rebuild its economy, but added: “We have a journey ahead of us which we will complete to do it.”

Rescue deal 

EU finance ministers yesterday agreed to a €500 billion rescue deal for European countries badly hit by the coronavirus epidemic.

Donohoe said it’s likely Ireland will need to access some of the supports made available.

There are three different elements in the plan – the first makes loans available via the European Stability Mechanism to countries who get into difficulty in terms of funding healthcare in response to Covid-19; the second will see the European Investment Bank make loans with low interest rates available to companies who need them; and the third is a plan to help countries pay for wage subsidy schemes.

“It’s very possible that we will need access to some element of this, in particular the funding that has been made available to the European Investment Bank,” Donohoe said.

“In short, we will use some of these facilities but there are other elements we would aim not to have to use.”

Donohoe said the measures Ireland has put in place to help combat the effects of the pandemic will be kept under review and changed if necessary.

“We now have over 200,000 workers, for example, on the wage subsidy scheme. We are paying up to 70% of their wages directly on behalf of their employer to keep people working,” he noted.

Restrictions 

Covid-19 restrictions are expected to be extended in Ireland beyond this weekend, after a meeting of the National Public Health Emergency Team later today.

Donohoe said “the guiding principle” the government is following is the advice of public health experts “who have been so clear in helping us get through this great challenge”.

He said experts will look at the transmission mechanism of the virus – how quickly it’s spreading and how it’s spreading – and decide the best course of action.

In order for the guidelines to be lifted as soon as possible, Donohoe said Ireland must “implement the guidance that is being given today”, urging people to follow official advice this weekend.

In terms of government formation, Fine Gael and Fianna Fáil are expected to agree a framework document on a grand coalition today. Donohue said the document needs to be approved by Taoiseach Leo Varadkar and Fianna Fáil leader Micheál Martin before the process moves forward.

He added that he hopes there will be discussion with other parties in the future, saying he wants a “stable majority” government.

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Órla Ryan

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