Mr. Sebastian Barnes:

Those are excellent questions and we deal with them in the report. Broadly speaking, we expect a strong bounceback as restrictions ease. This is partly because it is what we have seen in the past. The vaccine is a game changer. During the previous reopening when many people could have gone out, they might have felt an element of fear and decided to be a bit more cautious. In this case, even with the vaccine, people should obviously still have a degree of caution but they may feel more confident than they did before. We expect a strong bounceback. We can see it in the spending on credit cards, for example, which has been very strong in recent weeks.

Another reason for that strength is the savings. Household income, surprisingly, barely fell last year, partly as a result of the support schemes and partly because some sectors of the economy did quite well and wages increased by quite a bit in the year. We know that almost one quarter of that was saved, which is a record amount of saving. One of the big reasons was that people simply could not go out and spend. We expect that to be a driver of the bounceback and it may be one of the reasons the recovery is stronger than the Department of Finance predicts. There is a box on this in the report.

While there are different estimates, it appears that there are between €12 billion and €15 billion of excess savings, that is, savings over and above what can be explained. The Department of Finance assumes that only €2.5 billion of that, or an amount of that order, will be spent, which is a very small part of it. We believe it is quite likely that while people will not spend the whole amount - they will use some of it for debt reductions or keep it in their savings - it is likely that they will spend more than that the Department estimates. This will lead to a very strong amount of demand. We have looked at this closely in the box analysis, which suggests that many of the items on which people will spend, in particular services, have a very high Irish content and that people will not particularly buy and spend it on imports. This will increase the economic impact and benefits.

As the Deputy said, one question is whether people will go abroad this summer and spend their money there. In a world where people can go abroad this probably means that other people can come to Ireland. Hopefully, there will be some sort of offset in that regard.

These are uncertainties. It is very hard to predict because we have never been in this position before. We believe, however, that there are strong reasons to believe that consumption will come back pretty strongly for the reasons the Deputy outlined.

As the Deputy also noted, the picture is generally positive. There are risks. Something could go wrong and some businesses may continue to suffer. For example, if people do not go back to the office in a big way, businesses that cater to office workers may face a permanent challenge. As the Deputy said, balance sheets have taken a hit over the past year. Hopefully, good profitability in the next few months, combined with Government support, will mean the damage is fairly limited. However, we do not really know where businesses stand.