by Frank Schnittger
Mon Dec 21st, 2020 at 03:01:38 PM EST
Covid-19 is still creating chaos on the island of Ireland with a third wave gathering momentum and the death rate in Northern Ireland particularly severe. Hospitals there are full to capacity and patients have had to be treated in ambulances as they queue outside hospitals.
Meanwhile the Republic, in common with some other European countries, has instituted a travel ban with the UK, as concern rises about an even more infectious strain of Covid-19 spreading in south east England. The land-bridge through Britain is closed with France no longer accepting goods traffic from Britain, so plans for increased direct sea routes from Ireland to mainland Europe have been fast-tracked.
In some ways the situation now is so severe that if a no-deal Brexit were to happen on January 1st. people would hardly notice. So where is the good news, I hear you ask?
Firstly, the EU has finally approved the Pfizer-Biontech vaccine which means that inoculation can begin as soon as the EU Commission has approved it and we can hopefully end the cycle of lockdowns and travel bans some time in 2021. It hasn't come a moment too soon...
Third wave of Covid-19 gathering momentum in Ireland
Secondly, the independent Economic and Social Research institute is predicting that the Irish economy has grown in 2020 despite all the lockdowns.
The Economic and Social Research Institute has forecast that the economy will end up growing this year by 3.4%, despite record unemployment.
In its latest Quarterly Economic Commentary, the think-tank said exports by pharmaceutical and IT companies have remained strong but the shock of Covid-19 will impact the domestic economy for some time to come.
The ESRI described its forecast as "somewhat surprising" and it comes as official government projections are for a decline in GDP of 2.4%.
Buoyed by exports of pharmaceuticals and IT services, the economy has continued to grow and spending by consumers has bounced back.
But it is an uneven picture.
The ESRI believes unemployment will end this year at 20%. Even with a post-Brexit trade deal, it will average 14.5% next year.
That is because sectors such as accommodation, the arts and parts of retail continue to struggle and are unlikely to recover until the second half of next year.
The ESRI also warned the incoming Biden administration in the US may herald changes to international corporate tax rules. This could reduce the tax take here.
Pharmaceuticals and chemicals, taken together, account for just over two thirds of the value of Ireland's exports of goods.
Demand for these products is up 18% compared to last year.
Thirdly, the UN has ranked Ireland as second in the world in human development index behind only Norway in the rankings.
Overall Ireland's Human Development score has increased 23.5 per cent since 1990, a much faster rate of improvement than comparable countries, according to the measure.
Pedro Conceição, the lead author of the report, said Ireland's improved ranking was due above all to advances in education.
"The Irish economy has almost doubled since 1990, but the biggest driver was actually education. That was the indicator that made relatively more progress since 1990," Mr Conceição said.
Average life expectancy at birth was 74.8 in Ireland in 1990 and has risen to 82.3, while average years of schooling were 9.7 and are now 12.7.
When adjusted for inequality within the country, Ireland drops three places in the index to be overtaken by Iceland and Finland. However, the level of inequality in Ireland is lower than the average among comparable countries in the Organisation for Economic Co-operation and Development (OECD).
Measures of GDP in Ireland are distorted by the activities of Global corporates, and Human Development Indices are imperfect measures of societal development, at best. But at least Ireland is in a relatively good place as it addresses a perfect storm of continuing Covid-19 related lockdowns, a hard Brexit, global corporate tax reform and growing instability in Northern Ireland, where political divisions are preventing a coherent Covid-19 response.
If Brexit is as chaotic and disastrous for the UK as I expect, Scottish independence and increased pressures for a united Ireland are likely in the medium term. With the current deficit in Government spending estimated to be about 20 Billion in 2020 (6% GDP), Ireland is currently ill equipped to absorb the £10 Billion p.a. British exchequer subsidy for N. Ireland. The real question is how much of that subsidy would be required in the context of a united Ireland, a subject of much debate here, here , and here; a subject to which I plan to return when time allows.