Mr. Dan O'Brien:

Every country now faces extreme and unprecedented uncertainty. Never in my lifetime has it been more difficult to predict how the economy and indeed the world will look in a year’s time. The scale of the human cost of Covid-19 is well known and well articulated by those with medical expertise. The scale of the impact on livelihoods is less clear at this juncture even if it is visible in plain sight almost everywhere one looks.

I have two opening observations. Economies are like living organisms. A view commonly espoused since the pandemic struck is that they can be placed in deep freeze, but they cannot. Just as human cells quickly start to die off when starved of oxygen, the businesses which form the economy die off if deprived of trade.

My second observation is that the greatest economic cost of Covid is not the deficits governments almost everywhere are running in order to increase healthcare provision, support household incomes and save businesses, however huge those deficits are. It is instead the economic activity that has not happened as a result of the pandemic. The wealth that is not being created or the wealth that has been lost has been lost forever and this will have consequences down the line.

The scale of the slowdown in economic activity is becoming clear slowly as economic indicators for recent months become available around the world. Only yesterday our nearest neighbour, the United Kingdom, reported its figures for gross domestic product - the widest measure of economic activity - for the second quarter of this year, which was the worst period of the pandemic. In April, May and June, wealth creation in the UK collapsed by almost a quarter compared with the final quarter of 2019. That is a contraction utterly without precedent. The eurozone and the United States, which are, along with the UK, Ireland's most important trade and investment partners, have recorded slightly smaller contractions, albeit ones of historically large magnitude. Irish GDP data have yet to be published for that period and there is reason to believe that the headline contraction in activity here will be slightly less than in peer countries. However, there is also no doubt about the scale of the shock to the Irish economy from a range of available indicators, most notably those from the labour market. The latest data from the Central Statistics Office show that 500 million people were in receipt of jobless benefits of some kind in July. That figure is higher than at the worst point of the previous recession, which was itself a historically deep recession. Almost as many people again are having their wages and salaries subsidised. If one includes public sector workers, approximately half of the entire workforce is being supported by the State.

The single most important factor in ensuring the State can borrow to pick up the cost of these emergency measures is the willingness of the European Central Bank, ECB, to effectively print money. The ECB is committed to maintaining its pandemic purchase programme into next year. When and how it unwinds this programme is yet another source of great uncertainty.

As recently as 70 years ago, seven people died every day on average in the Republic from tuberculosis out of a much smaller population. The emergence of Covid-19 is in some ways returned to past times when fear of contracting a deadly disease was so prevalent. Our parents, grandparents and the generation before them lived with that disease. We will have to find ways of living with Covid as they did with tuberculosis.