Today the Government launched a €7.4 billion jobs stimulus to assist business re-open, get people back to work and promote confidence.
One of the main points for business mentioned in the measures is a cut in the VAT rate from 23 to 21% which will run from September to February 2021.
Also of importance is the waiver of commercial rates, which has been extended until the end of September, while a total of two billion euro in the Covid-19 Credit Guarantee Scheme will also be made available.
Launching the Jobs Stimulus, the Taoiseach, Micheál Martin TD said: “The stimulus package announced today will protect existing jobs while creating new and sustainable employment options in the months and years ahead. These measures will support small and medium businesses, give young people greater opportunities in training and education, support workers who have lost their jobs because of the pandemic and rejuvenate communities worst affected by the economic impact of the virus. This is a comprehensive plan which will boost the economy and bring confidence back to towns and villages across Ireland.”
Mr Martin said that many of the measures were designed to help individual businesses stay going during the pandemic, and to help them recover once it has passed. He went on to say, “The critical issue of tight cash flows which is threatening many businesses will be addressed through measures such as changes to the payment of key taxes and the provision of low-cost financing,”.
A spokesman for IBEC said earlier, “the package is ambitious and comprehensive, adding €7.4billion is the largest single economic stimulus in the history of the State”. They went on to mention “Government has clearly taken on board the input from business and the package addresses priorities IBEC identified in areas of enterprise liquidity; upskilling and getting people back to work; and infrastructure”.
Tanaiste Leo Varadkar said that as part of the financial package, there are two billion euros in loan guarantees. He added: “There’ll be a six-month reduction in the VAT rate, going down from 23% to 21%. “That’ll be particularly beneficial for the retail sector, furniture stores, clothing shops and also for pubs and restaurants.
The true extent of the economic damage done to the Irish economy by Covid-19, is when Mr. Martin stated that Ireland will run a 30 billion euro deficit this year, equivalent to around 10% of gross domestic product.
Ibec stated, ‘The Restart Grant for Enterprises is being extended to a broader base of SMEs and expanded by €300million. The maximum payment level is being increased to €25,000 and the minimum payment level to €4,000. Top-ups will be available to firms who have already received payments under the existing restart grant”.
Speaking about the commercial rates waiver scheme being extended, Ibec stated: ‘The six-month credit in lieu of rates will apply to all ratepayers, with limited exceptions, for the period 27 March to 27 September 2020. Details of the scheme will be further developed by the Department of Housing, Planning and Local Government. The Government-backed scheme will cost approximately €600million.
There will be a €200 million investment in skills development, education and training, job placements schemes and subsidies, all closely aligned with labour market requirements. A payment of €2,000 will be available to support employers to take on new apprenticeships in 2020 under the Apprenticeship Incentivisation Scheme.
Personally, I think this is quite a good response by the Government and the measures taken in response to the Covid-19 crisis. Businesses have never experienced such a massive drop off in demand. Not even in the last great recession. The measures outlined today, will go some way in reducing the pressures on business and stimulating spending.