Public Policy Bulletin, 29 January 2021

Jan 29, 2021

 

In this week’s Public Policy news, read how the healthy pre-pandemic position of Ireland’s public finances is expected to absorb the sharp increase in public indebtedness, and how collective redundancies in Northern Ireland reached a 10-year-high last year. In other news, the UK Government is to push trustees of pension schemes to assess the environmental impact of their investment portfolios, and a virtual Davos Agenda – the first of two Davos events this year – took place this week under the theme of “A crucial year to rebuild trust.”

Sharp increase in public indebtedness

The fourth annual assessment of public indebtedness, the Annual Report on Public Debt in Ireland 2020, was published this week by the Department of Finance. The aim of these reports is to provide a comprehensive analysis of public debt developments in Ireland. This report reveals that the COVID-19 pandemic led to a sharp increase in public indebtedness in Ireland, with debt-to-GNI (Gross National Income) expected to have increased by 12 percent in 2020. It is expected to increase again in 2021 to 115 per cent (approx. €47,700 per person). In spite of this, however, the debt service burden has fallen, reflecting the decline in borrowing costs.

It is expected that the shift in public indebtedness can be absorbed by public finances, namely due to the relatively healthy pre-pandemic fiscal position, low financing costs and a number of positive structural features of Irish public debt.

Speaking about the report, Minister for Finance, Pascal Donohue, TD, commented that the “measures taken will help to steer the economy through these challenging times, and help to return the public finances to a more balanced path once the worst effects of the crisis fade.”

Speaking on RTÉ’s Morning Ireland programme, Minister Donohoe stated that there were no plans to change the 12.5 percent rate of corporation tax under the current Government due to its importance to the country’s overall competitiveness, and that although tax increases during the crisis were ruled out for now, the Government is committed to bringing the finances back to a credible place when jobs and income begin growing again.

Collective number of redundancies in Northern Ireland in 2020 hit a 10-year high

A report on the latest labour market statistics published by the Northern Ireland Statistics & Research Agency (NISRA) this week has revealed that the collective number of redundancies over 2020 was more than double that of 2019, and that redundancies in Northern Ireland over the past year hit a 10-year high. Although the number of proposed redundancies decreased at the end of the year, 11,000 collective redundancies were proposed and 4,680 confirmed during 2020.

Employment numbers in the UK dropped year-on-year last month and fell by 828,000 between February and December 2020 due to the impact of the coronavirus pandemic, according to the Office for National Statistics (ONS).

Latest data from the HMRC confirmed that the number of people on furlough in Northern Ireland rose by more than a third between October and December, from 68,000 on 31 October to 94,800 by the end of December.

Climate change to be addressed by pension scheme trustees

The UK government has published a consultation seeking views on proposals to require trustees of larger occupational pension schemes and authorised schemes to address climate change risks and opportunities.

The measures will apply to schemes with more than £5bn in assets from October 2020 and to schemes with more than £1bn in assets from October 2022. The UK government is expected review whether smaller schemes should be subjected to the new requirements in 2023.

Guy Opperman, UK Minister for Pensions and Financial Inclusion, reportedly described  climate change as “a major systemic financial risk and a threat to the long-term sustainability of private pensions”. In 2019 UK chancellor Rishi Sunak announced the intention to mandate climate disclosure by large companies and financial institutions across the economy by 2025. This includes pension scheme trustees, asset managers and insurers disclosing climate-related financial risks and opportunities line with recommendations set by the Task Force on Climate-related Financial Disclosures (TCFD).

The consultation closes on 10 March 2021.

A virtual Davos Event

A virtual Davos event –the ‘Davos Agenda’ – took place remotely this week, as the World Economic Forum (WEF) brought together leaders from business, government and society leaders to jointly address the principles, policies and partnerships needed for 2021. The Davos Agenda, which concludes today, coincides with the usual date of the conference, and is the first of two Davos meetings in 2021; the second will be in Singapore from 13 to 16 May. Diverse topics addressed during the meeting can be grouped under seven key themes: 

  • How to Save the Planet
  • Fairer Economies
  • Tech for Good
  • Society & Future of Work
  • Better Business
  • Healthy Futures
  • Beyond Geopolitics

The event in May will be the 51st edition of this annual meeting, and will allow world leaders to meet in person for the first time since the pandemic began. The theme will be ‘the Great Reset’.

Ahead of this, the WEF will host a Global Technology Governance Summit in Tokyo from 6-7 April 2021, which will feature global stakeholders from government, business and civil society dedicated to ensuring the responsible design and deployment of emerging technologies through public-private collaboration.

Details of the Davos Agenda can be found here.

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