The big fear after the financial crisis was that we’d be left with a long-term unemployment crisis akin to the late 1980s, which scarred the economic landscape for a decade. However, the opposite happened, a more skilled workforce combined with a supercharged multinational sector returned us to near full employment within eight years. Both those variables are still in place.
The CSO data show the accommodation and food services suffered the greatest decrease in employment in the second quarter, followed by administration and support and construction . On the wider economic outlook, the minutes of the European Central Bank’s latest monthly meeting are instructive.On the upside, it notes that households could “unwind the forced savings accumulated during the lockdown period, leading to some ‘catch-up effects’ in consumption”. Consumption is the prime driver of economic activity, accounting for two-thirds domestic demand in the Republic and we’ve already seen a boost in consumer spending in June.
The bank’s “baseline” hypothesis involves a gradual reopening of the State this year and a rebound in economic activity – the one we hope we’re on – and sees the Irish economy contracting by 9 per cent this year, but expanding by 5.7 per cent in 2021. “Those countries that have introduced more stringent restrictions on economic and social activity have had a worse economic outcome.is far from an outlier in terms of the incidence of the virus yet has consistently had among the more stringent regimes in the world,” he says.