Public Policy Bulletin, 7 September 2020

Sep 07, 2020


In today's Public Policy news, read about how the eurozone countries are recording negative inflation for the first time in four years, how €15m is being made available in low-cost loans for microenterprises in Ireland and how UK pension providers will have to report on climate change financial risks or face penalty.

Europe's inflation may lead to more ECB stimulus

The current economic recession in the eurozone may result in a bigger and longer-lasting fall in consumer prices. This is according to reports by EU's Eurostat data agency that inflation in the 19 Eurozone countries turned negative for the first time since May 2016, falling to -0.2 percent in August. Underlying inflation also plummeted, defying analysts’ expectations, reportedly fuelling speculation by some economists that the European Central Bank (ECB) is preparing to inject even more stimulus in the European economy than the historic amounts it has already put in place.

It also puts even more pressure on governments to increase public spending to restore consumer demand. ECB policymakers next meet on 10 September. 

Tánaiste makes €15 million available to low-cost loan scheme for microenterprises

Tánaiste Leo Varadkar announced last week that Microfinance Ireland has opened its new €15 million COVID-19 fund to support small businesses through the current period of uncertainty and to protect jobs that have been impacted by the coronavirus pandemic here.

Small businesses can apply for loans up to €25,000 for a three-year term with no repayments and no interest due for the first six months of the loan. Businesses with fewer than 10 employees and turnover of up to €2 million can avail of the low-cost loans under the Microfinance Ireland Covid-19 Loan Fund Scheme.

The Tánaiste said: “This Fund has proven to be a lifeline for micro-enterprises over the past few months, where we’ve seen nearly 700 businesses with fewer than ten employees avail of it.”

Up to 31 July 2020, up to 683 businesses had availed of the €18.6 million sanctioned under the Covid-19 Loan scheme, with €18.6 million sanctioned. Further information is available via Microfinance Ireland.

UK pension providers to report on climate change financial risks 

The UK government last week published a consultation on a proposal designed to ensure pension providers consider the risk of climate change on their investments. Under the proposal, larger occupational pension schemes and authorised schemes will have to publish climate risk disclosures by the end of 2022.  Smaller schemes would have to meet the requirements by end 2023.

Under the proposals, some schemes would have to use the taskforce on climate-related financial disclosures (TCFD) framework for these disclosures, and must demonstrate that effective governance, strategy, risk management are in place.   Schemes would also have to conduct ‘scheme scenarios’ to test temperature scenarios for the scheme’s assets, will need to report the greenhouse gas emissions of their portfolio, and will be required to publish their report on a website and to notify pension scheme members, or risk receiving a mandatory penalty imposed by The Pensions Regulator.

Thérèse Coffey, secretary of state for work and pensions, said: ‘‘These measures will ensure pension schemes are in an ideal position to drive change to a sustainable, low carbon economy which will benefit everyone.” The consultation is open until 7 October, with a consultation on regulations planned for late 2020 or early 2021.

Read all our updates on our Public Policy web centre.