Government supports for businesses during the Covid-19 pandemic were remarkably successful. Economists feared the shut-down would cause long- term damage to the jobs market and the prospects of many workers. In the event, the economic bounce post-Covid led to a sharp rise in employment.
A longer term toll from the pandemic, as businesses finally ran out of road when supports were fully removed, was perhaps always inevitable. However the impact might have been limited had another crisis not hit in the immediate aftermath.
The Finance Bill contained details of new measures as the Government again steps in to help businesses through the energy crisis, mainly via the Temporary Business Energy Support Scheme (TBESS). This is an appropriate intervention given the sharp rise in energy bills, meeting up to 40 per cent of the increase. In most cases a monthly limit of ¤10,000 to State support applies, though this can rise to up to ¤30,000 in cases where companies have multiple outlets.
It is difficult to know what scale of assistance is correct but, as with Covid-19, the State has little option but to dive in with a comprehensive programme. Depending on price trends, the initial expiry date at the end of February may be extended to the end of April – or perhaps even longer. Phasing out assistance may be difficult as, unlike during the pandemic when the end of lockdown provided a clear marker, the energy crisis may drag on.
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The extension and tweaking of supports worked well during Covid-19. And it is possible that energy price trends, more moderate in recent months, may continue in the right direction. But the outlook is unpredictable and the slow EU move towards trying to hold down gas prices shows the complexity of addressing this.
The risk, heading into 2023, is that the combined impact of the fall-out from Covid-19, the economic slowdown and the energy crisis, lead to a sharp rise in company closures. The measures in the Finance Bill will help for now, but a tricky road lies ahead.