Marc Coleman, economist and founder of Octavian Consulting, discusses the likelihood of consumers and business being heard in the months to come.
Plato once said that if you leave involvement in policy and politics to others, don’t be surprised if competitors get the better of you. It was that principle that drove me to publish, back in April, a detailed strategy to put the business recovery at the heart of the policy response to Covid-19.
In its commitment to a July stimulus, multinational-SME collaboration and helping SMEs with Government procurement – and putting business at the heart of recovery – new Government priorities reflect many recommendations in that published analysis. The Programme for Government (PFG), however, also contains other proposals that could threaten many businesses with consumers left facing an uncertain future as incomes collapse for hundreds of thousands in the private sector and businesses close around the country.
All eyes will be on this month’s stimulus package. There is some preliminary good news from the private sector: May retail sales data show that a modest and somewhat v-shaped recovery looks like beginning. But the bad news is that consumers are still fearful of returning to restaurants, pubs and open-air activity and of using public transport or travel.
Compared to the same period a year ago, retail sales in May were still still well down. In fact, the volume of total retail sales has returned to pre-recovery levels. But compared to April, the seasonally adjusted index of Retail sales volumes bounced back strongly in May rising 29.5 per cent.
All eyes will be on this month’s stimulus package. There is some preliminary good news from the private sector: May retail sales data show that a modest and somewhat v-shaped recovery looks like beginning.
Year-on-year, retail sales volumes remain 26.6 per cent lower than May 2019 levels but, when Motor Trades are excluded, sales were 16.2 per cent lower. Correspondingly the bounce back for retail sales excluding the Motor Trade category was more modest in May, at 9.3 per cent.
The positive aspect of these figures is that while May remained a month of full lockdown, June should see further improvement. Excluding Motor Trades, retail sales now remain at 2014, just as the last recovery was beginning. As well as the July stimulus, addressing consumer fears on a number of fronts will be critical – particularly for the pub and restaurant sector.
On 25th June, the Central Statistics Office published survey findings on attitudes easing Covid-19 restrictions. The findings give crucial insights into consumer attitudes in sectors most affected by the crisis. The message for sectors involving hospitality, eating or drinking out, larger crowds outdoor or children is far from positive: Activity is likely to remain well below normal until public fears can be allayed and this will cap the recovery until then.
The July stimulus will also be crucial. In one of its first acts – the agreement to restore public sector pay – the government has signalled that there will be no return to “austerity”. The reality is, however, that the private sector is gripped in deep austerity. Not only do private sector workers still bear the burden of tax adjustments from the last crisis – net tax reduction over the 2014-2019 period barely dented the previous five years of relentless tax increases (while public spending rose in the same period by €16 billion per annum), but as Minister for Jobs Leo Varadkar pointed out it is the private sector that is bearing the brunt of job losses and income losses. He warned of serious divisions ahead. He may be right: Whatever the rhetoric, austerity is a brutal reality in the private sector. The question is how it is distributed. In the Programme for Government there is a commitment to the concept of a “Just Transition”. The July stimulus package will illustrate what that means in practice.
For some sectors, however, the Programme for Government’s policy stance will make recovery slow, difficult and in some cases impossible: Fossil fuel based cars are under government plans to be eliminated by 2030 and government initiatives on heating, energy and retrofitting could make whole classes of product obsolete.
In other areas changes to regulation and government policy will – on a sector by sector basis. Octavian has conducted a detailed outline of the new Government’s agenda and is there to help your business and sector respond to ensure you make your case for a fair share of recovery resources under both the July stimulus and October budget, but also a fair hearing in relation to profound regulatory and reform proposals that may change your industry forever. As Plato said, “If you’re not in, you can’t win.”