Killian Cawley said the Irish economy will need ‘significant funding’ to reboot after the Covid-19 crisis.
Killian Cawley, OCO Global’s trade director for Ireland, has warned that “austerity is not an option” as the EU considers a Eurobond approach to the Covid-19 crisis.
OCO Global, a Belfast-based foreign investment advisory firm, currently acts as an advisor to Enterprise Ireland and the UK’s department for international trade.
Cawley commented on the EU’s discussions before leaders met online this week via video conference to discuss proposals intended to stabilise the EU’s economy and support the economies of nations hit hardest by the Covid-19 pandemic.
Among the proposals discussed were the opportunities to increase the EU’s budget, issue grants and the sale of bonds to raise funds.
‘The Irish economy will need access to significant funding to help businesses get their operations rebooted’
– KILLIAN CAWLEY
Cawley highlighted the impact that these discussions could have on Ireland, which may be at particular risk due to its small size and reliance on the EU for jobs. “The more support and fiscal certainty that can be provided for both the provision of services and goods the better,” he said.
Earlier this week, Minister for Finance Paschal Donohoe, TD, said that the Irish economic landscape has fundamentally changed due to the outbreak of Covid-19, with Irish GDP set to fall by 10.5pc this year.
The EU’s discussions
EU Commission president Ursula von der Leyen said this week that the bloc’s mission is to “design a common, future-proof answer to [the Covid-19 crisis] to ensure the integrity and cohesion of the single market and its shared prosperity”.
She warned that the “firepower” of the next seven-year multi-annual financial framework budget needs to be increased. “We are not talking about billions, we are talking about trillions,” Von der Leyen added.
European leaders walked away from the virtual summit without an agreement on a figure for the recovery effort. While Italy and Spain are in favour of financial transfers to the hardest-hit states, rather than loans, nations such as Germany, Sweden and the Netherlands have expressed a preference for lending.
Von der Leyen said the arguments were constructive. “There will certainly be a sound balance between grants and loans and this is a matter of negotiation within the group of member states.”
Cawley said while concern over loan management and responsibility from some Northern European member states is “understandable and must be managed”, the implementation of the Eurobond will deliver “much needed solidarity for debt management”.
While he argued that the Eurobond could help the recovery of the Irish economy, he said that there will be a need for economic stimulus once current restrictions are lifted.
“One clear focus for the EU must be to prioritise and expedite capital investment and infrastructure projects to create jobs and stimulate business investment, trade and FDI,” Cawley said. “Crucial to that will be the free movement of goods, people and services, three pillars upon which the European Union is built.”
He warned that the strategy from the 2008 financial crisis of “strict fiscal and monetary constraints combined with national austerity” will not work to reboot the Irish economy under these circumstances.
“The Irish economy will need access to significant funding to help businesses get their operations rebooted and whichever Irish Government is formed in the coming months will not have the ability to raise the levels of funding predicted to stimulate recovery within the economy on their own.”