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: