Looking back 12 months at Insider’s preview of 2020, the danger of making even short-term predictions is starkly illustrated! The upcoming General Election, a post-Brexit trade deal, and the ongoing housing crisis were cited as the issues likely to dominate the political year; as it turned out, all featured but there was not one word about the issue that dominated the year - Covid-19.
Go away Covid
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It is with some trepidation that Insider assess what might lie in store for 2021, but surely it is safe to say the aforementioned pandemic will again be the dominant issue? And one that will also have a knock-on effect in how the other big issues play out?
More specifically, the big story of 2021 is likely to be the vaccine rollout. Governments and their populations internationally are blessed that a number of such vaccines have been developed so quickly, because it is evident they have no alternative strategy for getting out of this. A continued strategy of full or partial lockdowns, while hoping for something to turn up, would be a most depressing way to start 2021 as well as being unsustainable in the long run. Now there is hope on the horizon.
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For the Government however, this brings challenges. Whatever leniency the public will show in managing the threat of the pandemic, they will be far less forgiving if the solution is botched. People will now make the direct link between the vaccine rollout and the health and economic costs; being blunt, slower vaccination will be equated with more deaths and economic pain.
While the Government cannot do much about supplies, it will be acutely aware that a sceptical public will not forgive an inefficient rollout once supplies arrive, and will be keen to avoid pictures of fridges overflowing with unused vaccines.
Rebuilding the economy
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Unfortunately, this massive logistical exercise will take time and, even in a best-case scenario, we are likely to see some form of restrictions and impediments continuing for much of 2021. A successful rollout of the vaccine, and one that results in a reduction of cases, but more particularly of hospitalisations and deaths, is imperative to allow a gradual reopening.
The hope then is that a pent-up demand will be unleashed with savings that people have been unable to spend during the lockdown being spent in the domestic economy. There is some evidence from the partial reopenings during 2020 that this may be the case. There might even be a ‘feel good factor’ for a while afterwards.
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Nevertheless, there is a danger that certain sectors will have suffered significant scarring, and in particular, sectors such as retail and hospitality, which are currently just about staying afloat with the help of Government supports could keel over as these supports are withdrawn. Also, as Insider has noted before, the economic impact will be felt most acutely by low-income groups, younger people, and immigrants. This is something the Government will have to address rapidly or else risk growing disenchantment from these groups - the effect of which we have seen here and in other countries even pre-pandemic.
Another big question of course will be how the bill for how all of this is footed. The Government is fortunate it can borrow at low interest rates currently, but deficits of €20 billion per annum are not sustainable even in the medium term. How this is done could be the vexed economic question of the next few years.
Other domestic challenges
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This time last year, housing was front and centre in the General Election campaign that was underway. With the incessant focus on Covid-19, one could be forgiven for thinking the issue has since been miraculously resolved - far from it, and the vibe from councillors locally is that they are seriously concerned that the crisis is now particularly acute in Galway.
'There is a danger the establishment will see this as a ‘return to business as usual’ and that the lessons that should have been learnt from the last number of years will be unheeded'
Housing, and more particularly the sense of a generation being ‘locked out’ of the housing market, is a huge issue globally and is having a profound impact on the political fortunes of established political parties. The Government will be racing to get the construction industry fully reopened and housing completion numbers up.
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Other immediate Covid related challenges are health and education. Again, health was a dominant issue in last year’s election campaign (according to exit polls it beat housing as the number one issue ) and the pandemic has shone a light on the ‘seat-of-the-pants’ nature of much of our health service, such as ICU provision.
Notwithstanding that, to date the outcomes in terms of mortality and serious illness of those admitted to hospital has been good relative to many other countries. In the coming months the aim will be to weather this storm but after that there will be a focus on preparedness for future crises.
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In education, in addition to the short-term challenges of reopening schools and getting the Leaving Cert sorted, the question of any lasting impact of several months of closures on primary and secondary school children will have to be considered and, looking at the bigger picture, perhaps that thorny issue of the long-term future of the Leaving Cert will come to the fore?
Brexit – Done?
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‘Get Brexit Done’ was the theme of UK politics in 2019 and finally on January 31 2020 the UK formally left the EU. This time last year, the big question was whether the EU and UK could strike a trade deal within the year, as per the deadline laid down by Boris Johnson. Despite much scepticism at the time, not to mention the logistical challenges of the pandemic, this was achieved.
'The scale of division in the US is severe - something which has been building for much of the past 25 years, but only coming to a head more recently'
There would have been a sigh of relief this side of the Irish Sea when a tariff-free and quota-free agreement was struck, in addition to the UK honouring the Northern Ireland Protocol that allows for continued free movement of goods between the North and the Republic.
Despite this, the new reality means there are customs formalities and red tape to be complied with when it comes to movement of goods between Ireland and Great Britain and this has a knock-on effect for movement of goods to continental Europe. Already we have some hauliers experiencing some teething problems, although the hope is that as this beds down they will be resolved. Another sector that has immediate concerns is our fishing industry who are not happy with the terms of the deal on fishing.
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Looking at the bigger picture though, it is only the first stages of the Brexit process that have been completed, or the implementation phase as we might call it. The big question is what Britain does now it has left the EU, or as some of the louder Brexiteers have put it ‘Now that we have our freedom, what do we do with it’.
So, will the UK take measures in the areas of taxation and state aid for industry that will undercut the EU? What sort of trade deals will they do? This will have a knock-on effect for Ireland; for example, while Irish farmers are pleased they will not face tariffs or quotas on their products, what if the UK strikes trade deals to import cheap South American beef or New Zealand lamb?
Ireland and the EU
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Looking at the whole issue of the EU more generally, Ireland now finds itself in a very different space with the UK no longer being a member. In the past, we have tended to use the UK’s membership subtly to our advantage, generally being positive members and then letting the more Eurosceptic UK to do the bidding when a proposal that is not to our liking is tabled.
More generally, we are likely to see moves towards greater integration at EU level; the bloc has shown itself to be slow and inefficient to respond to crisis, its protracted decision-making process not lending itself to swift response. This came to the fore during the financial crisis but has done again throughout the Covid pandemic. Any moves towards further integration and changed decision-making processes will have profound impact for this country and the issue of Ireland’s relationship with the EU, largely off the table as a political issue for the past number of years is likely to again resurface.
Change in Washington
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Finally, this week we have seen a changing of the guard in Washington with the inauguration of Joe Biden as US President. It is no exaggeration to say this was greeted with a sigh of relief across most of the world, with the crazy Trump era ending fittingly enough in crazy scenes outside the Capitol building earlier this month. This week sees the USA returning to the fold in terms of global cooperation in a range of areas.
There is however a danger that establishment figures will see this as a ‘return to business as usual’ and that the lessons that should have been learnt from the last number of years will be unheeded. Also, while it may be cliché, the scale of division in the US is severe - something which has been building for much of the past 25 years, but only coming to a head more recently.
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The new president will have an impact on a host of issues internationally, including climate change, trade, and on critical matters such as relations between China and the west; being parochial about it however, we can look forward to some of our own at the heart of decision-making in Washington with Marty Walsh’s appointment to the cabinet and a host of people with Galway and Mayo lineage, including the new President himself playing key roles! Perhaps we should look at that bright light as a sign for hope in 2021.
