As well as the serious impact on health, the rapid rise of the fourth Covid-19 wave is having significant economic impacts. In particular the hospitality sector, one of the worst hit through the pandemic, is again in the firing line. There are also longer-term economic questions from the seeming inevitability that Covid-19 is now an endemic disease.
The range of financial supports put in place by the State have done much to sustain those worst hit. The Employment Wage Subsidy Scheme has helped to keep companies ticking over. The plan to reduce payment levels under the scheme in December may have to be reconsidered, certainly in some sectors. While businesses can remain open, many are seriously affected. Christmas parties and events are being cancelled. City and town centre coffee shops and restaurants are again seeing a big fall-off in business. It is not a lockdown but it is not normal either and the wage subsidy scheme has a big role in keeping businesses and their employees connected through the difficult weeks ahead.
The wider hospitality sector had a generally positive reopening, with demand exceeding expectations for many. However, the fall-off in business now being experienced will renew financial pressure. And it presents awkward choices. Lower turnover and trading levels are likely to require fewer staff. But attracting them back in the first place and finding new hires has been a major issue and will give many companies an incentive to retain employees this time around.This is where wage subsidies, in particular, can help by making it viable to do so.
Demand will return when infections fall and people feel more confident to go out again. Recent Central Bank figures again demonstrate the significant amount of money in the bank accounts of many households, with savings hugely boosted through the pandemic. There were clear signs of rising spending as restrictions lifted and while there will now be some tailing off, indications are that retail activity is holding up.
Wider questions arise too.The way people work, socialise and spend their money may alter with implications for many firms. Business and leisure travel look certain to change and the pattern of consumer behaviour is uncertain.
The economy has come through the pandemic in better shape than might have been expected. But some sectors will require ongoing support. So will some people who have lost employment even if the jobs outlook, in general, appears positive.The latest wave is a brutal reminder that this is not over and raises questions about what comes next. A clear strategy from the Government – vital of course from the wider point of view of health and our society – is also important economically. Booster vaccines and reduced social activity may get us through this wave, but what then?