Speaking last Thursday, (10th December 2020) following the European Central Bank (ECB) announcement of the €500bn expansion of the Pandemic Emergency Purchasing Programme (PEPP), Chambers Ireland Chief Executive, Ian Talbot, said, “Today’s action by the ECB is welcome news. This injection of funding will help maintain liquidity and the low interest rates which are available to Eurozone member states like Ireland, allowing us to support our high level of public service, employment supports, and economic stimulus programmes through this period of straitened fiscal returns.
This move by the ECB highlights the strength of being part of a strong, dynamic and collaborative community of nations which take concerted, collective action when faced with problems that exceed the capacity of individual members to manage. While some believe that even greater resources could have been made available, Chambers Ireland welcomes ECB’s President Lagarde’s commitment to making further PEPP credit available should such an expansion be needed. This boost in liquidity will provide support for essential government spending that will help minimise the economic impact and financial burden on households and businesses.
The policy of supporting banks through the lending of money to them at negative rates, conditional upon them continuing to lend money to businesses and consumers, will also reinforce the resilience of the Eurozone. This unprecedented support from the ECB highlights the key role that the EU has to play in supporting member state economies as they reckon with turmoil caused by exogenous, external factors which harm our wellbeing.
In light of the deepening divisions which have emerged over the last few weeks during the EU/UK trade negotiations there is a hard, and probably chaotic, Brexit looming in January. Even if a minimal trade deal is agreed this week there will be a dramatic effect on the Eurozone economy, an effect which will be most deeply felt in Ireland. In the best-case scenario, businesses here that trade with, or source supplies from, Britain are going to experience a level of disruption which has not been seen since World War II.
Today’s announcement will ensure that even if Britain leaves on World Trade Organisation terms, the cost of the deficit borrowing that Ireland is likely to need next year should not be detrimental to the long-term sustainability of our public finances.”