In his regular column in the Business Post, as countries and businesses emerge from pandemic restrictions, Dr Brian Keegan analyses the patterns of effectiveness of the various government supports and potential problems for the future. In his column in the Irish Examiner, Dr Keegan discusses how the harshness of COVID-19 restrictions, do not have to be followed by harsh economic austerity.

The Economic and Social Research Institute (“ESRI”) has described the COVID-19 outbreak as a major shock to economic life which is unprecedented in modern times. In its Summer Quarterly Economic Commentary, the think tank urged the Government to stimulate activity in the economy. It is urging investment over cuts in the short term as this will reduce the 'scale and impact' of the crisis on the domestic economy over the next 18 months. It specifically urged the Government to invest in social housing and retrofitting homes, to catch up with the underlying demand for housing and to help Ireland reach its climate goals. Among the points the ESRI raised were: Unemployment this year to average 17 per cent Necessary investment, as well any extension to the pandemic unemployment payments, will increase the deficit, which it expects to be around €27 billion this year, although it recommends no immediate change to the pandemic unemployment payments Household savings may double during the pandemic, which could deliver a boost to the economy, once a recovery begins Supports for business will be difficult for government to get right with difficult choices being required Not all firms will survive   The ERSI described the best-middle case and worse case situations as follows: Situation % economy risks contracting by % unemployment risks reaching: Best-middle case 9-12 per cent 10-17 per cent Worst case:* up to 17 per cent 20 per cent *where a second surge of the virus emerges

On May 27, the European Commission put forward its proposal for a major recovery plan. The European Commission is proposing to create a new recovery instrument, Next Generation EU, embedded within a powerful, modern, and revamped long-term EU budget. The Commission is proposing to harness the full potential of the EU budget, combining Next Generation EU (€750 billion) and targeted reinforcements to the long-term EU budget for 2021–2027, to create €1.85 trillion. The Commission has also unveiled its adjusted Work Programme for 2020, which will prioritise the actions needed to propel Europe's recovery and resilience. European Commission President Ursula von der Leyen said: “The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalization will boost jobs and growth, the resilience of our societies and the health of our environment.” The money raised for Next Generation EU will be invested across three pillars: 1. Support to Member States with investments and reforms 2. Kick-starting the EU economy by incentivising private investments 3. Addressing the lessons of the crisis All of the money raised through Next Generation EU will be channelled through EU programmes in the revamped long-term EU budget: The European Green Deal as the EU's recovery strategy Strengthening the Single Market and adapting it to the digital age A fair and inclusive recovery for all   Visit the European Commission’s website for more details on the announcement to repair and prepare for the next generation. To read the Q&A on the proposal, visit their dedicated page.