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Covid-19

It is currently impossible to avoid the news of the Covid-19 epidemic at the moment as the situation unfolds rapidly and becomes an increased risk of becoming a global pandemic. A pandemic is an issue that we in this country would be unlikely to have prepared for in a business sense and as a result we may see this virus affect our business landscapes in ways we may not have expected. As cases begin to grow in number and community transmission begins to become more apparent, it is important for businesses to have a plan in place for keeping their employees safe.

The Government have recently published an income support and economic stimulus package which outlines the following main points for companies who may find themselves on lock down or needing to self-isolate their staff or work from home or to reduce economic impact:

  • The 6 waiting days for sick pay with a medical cert will be waived.
  • The means test requirement for Supplementary Welfare Allowance for medically certified self-isolation will be removed.
  • Self-employed individuals will now be entitled to receive either illness benefit, or non-means tested supplementary welfare allowance.
  • A €200million liquidity support fund will be available for impacted firms.
  • The existing systematic short time working scheme is available for employees who may be placed on reduced working arrangements.

On a more global scale, it has been reported that businesses worldwide are changing and adapting practises to better cope with Covid-19. Many companies in Ireland, the United Kingdom and the United States have immediately implemented travel restrictions or a work from home policy for the foreseeable future in order to avoid community transmission within the office space. Unfortunately, these issues will naturally cause service issues for some.

From looking at the China model which involves the businesses who were first hit and continue to deal with the fallout of the virus, a few key pointers for other businesses worldwide have been outlined:

  • Plan ahead but be prepared for the need to be adaptable as the situation develops.
  • Keep employees informed consistently so that they feel safe and protected.
  • Relocate labour where possible. In situations where employees can work from home to prevent community transmission this can be effective as well as social distancing practises in roles that can not be completed at home.
  • Utilise social media and shift some operations to an online system where possible.
  • Prepare for recovery be it fast or slow moving.
  • Look for the positive points and identify where your business can improve in the face of adversity.
  • Use the situation to become more innovative and embrace innovation within your business and your employees. Thinking on your feet is essential in such a fast moving constantly unfolding landscape of change.

This will undoubtedly be a period of unease and difficulty for many on both a business and personal level, but through following the appropriate guidelines we can endeavour to keep all feeling safe.

 

When Planning Ahead, Never Forget the Danger of Recession…

As the summer season enters full swing and we begin to see the summer sale signs crop up in all the high street stores, it would be easy to fall into the trap of believing that Irish businesses are fully safe from the dangers of recession and financial instability for the foreseeable future. As we see consumer spending continue to remain strong, it is easy to overlook the many stores and businesses closing and falling victim to financial difficulty.

Although it has now been many years since the height of the recession and we often find ourselves thinking of it as a long distant memory, it has recently been suggested that the woes of recession may not be as far in the rear view mirror for us as we may like to believe. The CEO of the National Treasury Management Agency Conor O’Kelly has suggested that the chances of Ireland being hit by another recession are 100%. He has suggested that a combination of Brexit concerns, changes to taxation and other thus far unforeseen issues are likely to plunge our small Ireland into another recession in the future.

In terms of having country wide safeguards in place for Brexit, Mr. O’Kelly concluded that Ireland may not be sufficiently protected from the negative impact of worldwide trade around us in the shadow of so much uncertainty. He also suggested that a contingency plan needs to be put in place going forward to better assist us in navigating these issues.

“I suppose whether Brexit, Italy, corporate tax or some other challenge that we have Ireland is a small, open economy, highly indebted, relies on international investors for 90pc of its borrowings. […] People talk about whether the bond market is predicting recession or who’s predicting a recession. I’ll give you a prediction of recession. The chance of a recession in Ireland is 100pc. So, we can’t afford not to have a contingency in place. We have to remain vigilant to that and we do that by having significant cash buffers at all times, smoothing out the profile of the debt to make sure we minimise the refinancing risks in the future.”

It has been suggested while there are some safeguards and rainy-day funds in place, more will need to be done to ensure that we do not leave ourselves entirely vulnerable to threat and that although this prediction seems bleak, that it is not a certainty regarding Brexit etc. Rather it is a suggestion for some point in the future that a recession in Ireland is once again a future inevitability. The possibility of a Hard Brexit however does place us in a precarious position and ensure that as a country we are unfortunately more vulnerable than we would otherwise have been to financial instability.

As always, our advice is to safeguard your own business and finances in any way possible going forward and to remain vigilant of any possible threats.

Should you have any concerns or queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to be of service.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

The Irish Economy’s Debt Situation

As we have previously discussed, there is still an atmosphere of fear surrounding the possibility of another financial crisis or recession in Ireland. With the news that financial experts predict that it is almost a certainty that another financial crisis will hit Ireland in the future based on current figures, it is difficult to avoid the reality that despite major improvements in recent years, financially speaking Ireland is not out of the woods just yet.

As we are all aware, the debt on Ireland’s shoulders still remains, but recent reports have queried who is truly to blame for the level of debt we find ourselves in? It has been reported that at the peak of the financial crisis, spending was approximately €23billion more per year than what was taken in. The Irish economic debt situation of €205billion has long been blamed on the elusive villain known only as “The Bankers” in that the bailing out of bank debt was the sole cause of the financial crisis, which is not the case in actuality as only just over a quarter of this debt can be attributed to the bailing out of the banks, a figure which stands at €60billion.

In reality we are all aware of the heyday of the Celtic Tiger and its series of mishaps that lead us to the point of no return. Far from the bailing out of the banks being the only cause of the financial collapse, it is estimated that a little over €100billion of the Irish debt relates to governmental mismanagement of public funds, budget deficits and a desperate attempt by the then government to cover for lavish spending and plug a hole in the debt before it inevitably began to spiral. In order to stem the haemorrhage of funds, the government had used windfall tax revenues from the property sector.

Naturally, these funds were by no means bottomless and so when they were no longer available we began to see our budget deficits grow exponentially. It has been reported that at the height of the crisis in 2009, the State was spending approximately €23billion more than it was taking in each year before they began borrowing in earnest which found us in the midst of massive debt.

As we discussed recently, there is always the danger of finding ourselves in this position again, and as such safeguards need to be put in place, in the same way we would suggest safeguarding your business, it is vital that we safeguard our country’s finances. With this in mine, the Irish Fiscal Advisory Council has begun to criticise the government over their spending and has suggested that current spending and debt has “worrying echoes” of the past. It is hoped that change will be implemented and safeguards put in place to ensure that we do not snowball into harms way once more but as always we recomment being vigilant with your own finances and business and ensuring that you are as protected as possible.

Should you have any queries, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

Is The Economy Overheating?

Too Much of a Good Thing

When emerging blinking from the darkness of an economic crisis, such as the one Ireland experienced in the not so distant past, it becomes important to latch on to the positive steps in the right direction many of which we have spoken about in the past with new funding options being made available as well as a general increase in consumer confidence. Amidst all this good news there have of course arisen some issues such as the exponential rise in house prices and the general cost of living leaving many to question whether or not Ireland’s recovery will ever be felt in the average wallet. It’s important not to get too cocky or confident in the midst of a recovery as we have seen in the past than anything can happen with no notice.

These fears were somewhat verified this week as the Central Bank warned Ireland not to become complacent about recovery. Mark Cassidy, the Central Bank’s director of economics and statistics has warned that despite all signs pointing to continued strong growth and plenty of jobs being created, that there are many factors at play in the background that could possibly leave Ireland at risk of seriously overheating. Overheating refers to when growth begins to overtake ability to meet demand, something that we are already seeing some evidence of in our housing markets. From the possibility of a hard Brexit which we have spoken at length about to the recently discussed changes in international tax practises, there are many reasons to be wary and plenty of issues which threaten to place Ireland in an economically vulnerable state.

The Central Bank have issued several warnings in recent months that the risk of an external crisis causing issues for the Irish economy was high, but recently have announced that the possibility of an internal crisis is on the rise as Ireland begins to overheat. Last week, Central Bank officials postulated that it may be necessary for taxes to be increase in order to cool down our rapidly overheating economy.

The risk remains that if Ireland continues to recover at the same speed and manages to reach its full capacity for growth, it is of course a positive, but unless demand in various sectors begins to increase in conjunction with this, the risk of overheating and creating some form of downturn remains high.

Should you have any queries or require further information on this or any other business or financial matter please don’t hesitate to contact us here at EcovisDCA’s new head office, where as always we will be delighted to help.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY

 

Signs of continued Economic Improvement?

Hope is the thing with Euros.

Ever since the economic downturn, good news must be taken with a pinch of salt in terms of finances and the economy. Whilst we are somewhat used to the deluge of negative stories of ever increasing house prices as well as the general cost of living, we must also celebrate the good news, the positive stories and the numbers that inspire hope for the future of our small island’s finances. Particularly as more Brexit talks loom on the immediate horizon and there is a certain nervous and uncertain energy associated with the future, it is crucial to accept and celebrate whatever small victories are available to us at this time.

This month it was revealed that consumer spending has risen, which marks 14 months of continual growth for Ireland. Whilst the rise may not seem exponential, it is the fact that growth has been continuous for over a year that is important here for a country recovering from a severe crisis. This is vital as such sustained growth feeds into other aspects of the countries growth through fuelling job creation and boosting morale. The Visa Irish Consumer Spending Index suggests that payments of all kinds increased by almost 4% in April in comparison with the same time the previous year. This rise has been particularly evident in the area of online spending, which continues to soar.

This large spike in growth was in fact encouraged by March’s Storm Emma, which briefly dampened consumer activity and lead to a larger spike in April than expected. The unexpected snow storm meant that March saw a rise of only 1.5%. Some retailers have reported a decline in sales of up to 30% which has led to a lot of ground needing to be made up in the remaining months of the year for these retailers, many of which had to close their doors for a number of days due to the adverse weather conditions.

Whilst this increase is of course a move in the right direction for spending in Ireland, it is advisable to remain cautious as always as Visa have themselves reported that this level of growth “remains relatively subdued” perhaps due to the level of ground that needs to be made up following Storm Emma’s damaging effects. Cautiously optimistic may be the appropriate outlook for the coming months.

Should you require any help, advice or guidance on any financial or business matters, please don’t hesitate to get in touch with us here at EcovisDCA, where we will be happy to support you in getting your business to the next level.

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DCA PARTNERSDECLAN DOLAN & EAMONN GARVEY