A new report by the OECD outlines how greater global co-operation and a strong, targeted policy action is needed for a sustainable recovery from the COVID-19 crisis. The report outlines how governments need to plan now for the recovery while continuing to live with the virus. The OECD also identifies the need for stronger co-operation between governments in a number of areas including in the taxation of multinationals as the economy becomes increasingly digitalised. For more information you can read the report here.

  In this week’s Public Policy news, read about recommendations contained within a report on Ireland’s pension landscape; the European Commission’s economic forecast for Ireland and its proposal to grant Ireland €2.5 billion in financial support; a proposed expansion in Northern Ireland's aerospace sector; and the emergence of the world’s largest trading bloc in Asia. New report recommends simplifying Ireland’s pension landscape The Interdepartmental Pensions Reform & Taxation Group last week released a new report, running to 140 pages, which looks at ways to simplify the supplementary pension landscape, a review of the Approved Retirement Fund (ARF) as well as assessing the cost of the State providing tax relief for pension savings.  The Group which is chaired by the Department of Finance and includes members from Revenue, the Department of Social Protection, the Pensions Authority and the Department of Public Expenditure and Reform have written the report based on responses to the 2018 public consultation exercise. The report recommended several areas of reform to consider including the following: The normal retirement age should increase from70 to 75 years (i.e. the age by which pension funds have to be drawn down). The age at which people can access their pension funds will be standardised at 55. The report says that this is in line with longer working as a result of increasing age. Accurately calculating the total cost of tax relief on pensions is a challenge due to limited availability of data. However, tax relief on pension contributions benefits middle income levels the most with those on higher incomes also benefiting. Automatic enrolment has the potential to address both the coverage and adequacy gaps in Ireland; however care needs to be taken to ensure that any State Benefit is aligned in some way with the current tax relief. Buy out Bonds (BOBs) and Retirement Annuity Contracts (RACs) should cease. Existing BOBs and RACs should be allowed to run-off over time. The PRSA should operate as the sole personal pension product. The Approved Minimum Retirement Fund (AMRF) should be abolished given that the State Pension means the requirement to have an annual guaranteed income of €12,700 is largely redundant. The differential treatment of the PRSA for funding purposes should be abolished, employer contributions to PRSAs should not be subject to BIK. In addition to this, a new Pensions Commission has been set up to examine the possibility of increasing the State Pension Age. Auto-enrolment proposals are still under review. We will keep readers posted of developments. European Commission publishes Autumn Economic Forecast for Ireland  The European Commission this week published its Autumn 2020 Economic Forecast. It projects that Ireland’s economy will contract by 2.25 percent in 2020. The 3 percent growth it anticipates in 2021 will be followed by further growth of 2.5 percent in 2022. A better reflection of the underlying domestic economy, though, is modified domestic demand. This the Commission expects to fall by 6.5 percent in 2020 and grow by 7.25 percent in 2021 and 4.5 percent in 2022.  A summary of the forecast has been reproduced below:   2019  2020   2021 2022  GDP growth (%, yoy)   5.6   -2.3  2.9   2.6   Inflation (%, yoy)                                                                                0.9  -0.5   0.3  1.6 Unemployment (%)  5.0   5.3   8.9   8.7   Public budget balance (% of GDP)   0.5   -6.8   -5.8   -2.5   Gross public debt (% of GDP)   57.4   63.1   66.0   66.0   Current account balance (% of GDP)   -11.3   5.7   0.2   -1.1 Source: Economic and Financial Affairs       European Commission Despite a strong rebound in the third quarter after the severe shock in the first half of the year, the later resurgence of the pandemic means that growth projections over the forecast horizon for the euro area and the EU are subject to an extremely high degree of uncertainty and risks. Output in both is not expected to recover its pre-pandemic level in 2022, In the case of Ireland, the Commission found that Ireland’s domestic economy was hit severely by Covid-19 control measures in the first half of the year. The fall in real GDP was cushioned by strong exports by multinationals and employment has been shielded by state income support schemes. However, the contraction in the economy, combined with the high fiscal stimulus packages are expected to significantly widen the budget deficit, so, similar to the euro area and EU, risks to Ireland’s outlook remain exceptionally high. The full Irish forecast can be found here. €2.5 billion proposed for Ireland under SURE The European Commission has proposed a decision to grant €2.5 billion in financial support to Ireland under SURE. SURE is the European instrument for temporary financial support to mitigate unemployment risks in an emergency.  It is part of EU's strategy to mitigate the negative consequences of the COVID-19 pandemic by protecting jobs and workers. It covers 18 Member States, including Italy, Spain and Poland. If the proposal is approved by the European Council, Ireland will receive loans on favourable terms to help cover the costs associated with the Temporary Wage Subsidy Scheme. Northern Ireland’s aerospace sector set for expansion   Invest NI has announced it is seeking a contractor to deliver a new ‘Northern Ireland Aerospace Customer Diversification Programme’. Anticipating an ‘inevitable upturn and new world of aerospace’, the scheme reportedly plans to diversify Northern Ireland’s aerospace sector and help it expand to reach new and emerging markets. A further goal is to research and identify areas where the existing manufacturing supply chain can collaborate with “Northern Ireland’s cybersecurity and technology sectors to target emerging opportunities in new sectors and aerospace with a view to the decarbonisation of aviation”, placing emphasis on markets where the Northern Ireland Aerospace supply chain and associated technology supply chain can compete. UK publishes 10-point plan for ‘green industrial revolution’ This week UK Prime Minister Boris Johnson published a 10-point plan for a ‘green industrial revolution’. The plan aims to create and support up to 250,000 jobs. The points of the plan are: Producing enough offshore wind to power every home. Increasing the production of low carbon hydrogen, with the aim of developing the first town heated entirely by hydrogen by 2030. Advancing nuclear as a clean energy source. Accelerating the transition to electric vehicles and transforming the national infrastructure to better support electric vehicles. Making cycling and walking more attractive ways to travel and investing in zero-emission public transport of the future. Supporting industries that are difficult to decarbonise to become greener through research projects for zero-emission planes and ships. Improving energy efficiency of homes, schools and hospitals, and installing 600,000 heat pumps every year by 2028. Becoming a world-leader in carbon-capture technology, with a target to remove 10MT of carbon dioxide by 2030. Protecting and restoring our natural environment, and planting 30,000 hectares of trees every year. Developing relevant cutting-edge technologies and making the City of London the global centre of green finance. Read more about this plan at gov.uk. Agreement reached to create world’s largest trading bloc 15 countries have agreed to set up the world’s largest trading bloc. Called the Regional Comprehensive Economic Partnership, or RCEP, its aim is to reduce barriers in an area covering one-third of the world’s population and economic output. The countries in the bloc include China, Japan, South Korea, Australia and New Zealand, as well as the countries in the 10-nation Association of Southeast Asian Nations (ASEAN). These include Cambodia, Indonesia, Laos, Burma, the Philippines, Thailand, Brunei, Singapore, Malaysia and Vietnam. The deal followed eight years of negotiations, which culminated at the annual summit of the 10-nation Association of Southeast Asian Nations (ASEAN), hosted by Vietnam. Although the deal is not expected to integrate member economies as the EU does, it does build on existing free trade arrangements, and will further reduce already low tariffs on trade between member countries. Read all our updates on our Public Policy web centre.  

  In this week’s Public Policy news, read about the launch of Chartered Accountants Ireland’s new resources on sustainability for accountants; Skillnet Ireland’s new strategy to prepare businesses for the future world of work; the continuing economic impact of COVID-19 on Northern Ireland;  the UK’s moves to become a world leader in green finance; and the EU budget to build a greener, more digital and resilient Europe. Launch of Sustainability for Accountants The Institute launched Sustainability for Accountants, a practical, easy-to-read short guide to help accountants understand sustainability and discover how to implement sustainability practices in their own organisations. The guide, along with an online sustainability hub, were launched as part of Climate Finance Week 2020 at a webinar at which former Institute president Terence O’Rourke joined a panel of Dr Rodney Irwin, Managing Director of Redefining Value at the World Business Council for Sustainable Development and Cróna Clohisey, Institute Public Policy Lead, to discuss the role accountants have in embracing sustainability. Moderated by Dr Brian Keegan, Director of Advocacy and Voice, the webinar also included a keynote address by the current Institute President Paul Henry. Speaking about sustainability, Terence O’Rourke stated that “Chartered accountants have a key role in helping organisations focus on, and effectively use, the measurement and reporting of key metrics. Increasingly, sustainability measures are becoming more important.  It is vital that we accountants are capable of supporting and leading our organisations transform our regular management and board reporting to encompass the recording and clear presentation of  sustainability KPIs”. You can watch a recording of the event using this link (video starts at 2:14:41). Skillnet Ireland launches new strategy to prepare businesses for the future world of work Skillnet Ireland this week launched a 5-year strategy Transforming Business Through Talent 2021-2025. Centring around the three themes of workforce design, people development and strategic innovation, the strategy sets out ambitious targets to increase the organisation’s engagement with business and industry, training and upskilling the workforce to combat challenges including Covid-19, Brexit, climate change, and automation. Minister for Further and Higher Education, Research, Innovation and Science, Simon Harris, TD, described the strategy as “a key milestone in Ireland’s economic recovery and growth… designed to help our businesses and workers prepare for the future world of work. Having a skilled and agile workforce is essential to how we respond to current and future business challenges.” Skillnet Ireland, whose mandate is to advance the competitiveness, productivity, and innovation of Irish businesses through enterprise-led workforce development, is currently funded from the National Training Fund through the Department of Further and Higher Education, Research, Innovation and Science, with employers paying a contribution towards some training programmes. Economic impact of COVID-19 on Northern Ireland continues Figures published this week by the Northern Ireland Statistics and Research Agency have revealed that redundancies in Northern Ireland more than doubled in 2020, with record high numbers recorded in June and July. An Ulster Bank Survey, which analyses private sector companies, has reportedly indicated that business output in Northern Ireland ‘stagnated’ in October as new orders decreased and staff cuts continued. It also indicated that any prospect of a return to growth is unlikely in the near future. Research carried out by the Department for the Economy to analyse the economic impact of the four-week ‘circuit breaker’ during the coronavirus pandemic also revealed that it may lead to a loss of £400m to the economy, on top of losses of £4bn to 5bn already this year. The UK similarly recorded a record high number of layoffs during the third quarter, with the Office for National Statistics reporting that redundancies had reached an all-time high of 314,000. UK seeks to become a world leader in green finance The UK government this week announced that it would sell its first sovereign ‘green’ bond next year, and announced the intention to mandate climate disclosure by large companies and financial institutions across the economy by 2025. The move, announced in a speech about the future of the financial sector on Monday by Chancellor of the Exchequer Rishi Sunak MP, was described as “truly transformative” by Mardi McBrien, Managing Director, Climate Disclosure Standards Board (CDSB). McBrien further commented:  “Mandatory implementation of climate risk disclosures using the TCFD recommendations across major sections of the UK economy by 2025 will improve business resilience, level the playing field for companies and investors reporting on climate and drive investment to finance the UK’s transition to a net zero future.” The announcement came on the same day that Mark Carney, the British Prime Minister’s finance advisor for green finance and former Bank of England governor called on the world’s governments to adopt internationally standardized regulations of climate-related disclosures for the financial sector. Carney described climate change as a “crisis which involves the entire world, and from which no one will be able to self-isolate”. Also this week, the Financial Reporting Council published a review in which it stated that corporate reporting needs to improve, and that investors expect to see disclosures regarding the financial implications of climate change. The Council in the review encourages PIEs to report against the TCFD and SASB metrics for their sector. Agreement on EU budget to build a greener, more digital and resilient Europe The European Commission this week welcomed agreement on Europe’s next long-term budget and NextGenerationEU, its temporary recovery instrument, following interinstitutional negotiations between the European Parliament and the Council, and with the participation of the European Commission. Once adopted, the package of a total of €1.8 trillion will be the largest package ever financed through the EU budget. The package will help rebuild a post-COVID-19 Europe, which will be greener, more digital, more resilient and better fit for the current and forthcoming challenges. Described as a budget fit not only for today's realities but also for tomorrow's uncertainties, 30 percent of  EU funds will be spent to fight climate change, the highest share ever of the largest European budget ever. The package also pays specific attention to biodiversity protection and gender equality, and will have strengthened flexibility mechanisms to guarantee it has the capacity to address unforeseen needs. The Commission has committed to put forward proposals on a carbon border adjustment mechanism and on a digital levy by June 2021, with a view to their introduction at the latest by 1 January 2023. The Commission will also review the EU Emissions Trading System in spring 2021, including its possible extension to aviation and maritime. It will propose an own resource based on the Emissions Trading System by June 2021. Read all our updates on our Public Policy web centre.