A leading economist has said that while Covid and Brexit have brought “huge challenges” to Cork and the South West region that they can also be a catalyst “to help make choices about the type of economy and society we want in the future”.
Neil Gibson, chief economist with Ernst & Young (EY) said that the “twin crises” of Covid-19 and Brexit had shaped 2020, but that Cork was “well placed to continue its upward trajectory when Covid-19 is behind us as investors are increasingly focussed on two interlinked factors when making their investment decisions — talent and quality of life.”
Speaking to The Echo, Mr Gibson said that the pandemic had really put into perspective the importance of quality of life.
“Covid has really led to people reassessing what matters and what is important.
“Cork’s obvious advantages of the airport, the new university, the pharma and tech clusters are well known but this idea that you can avoid the heavy congestion and dense cities, it really plays to a city with a bit more space and character with options to have a garden or a bit more space or to live by the coast, there are a lot of advantages for places who can offer good employment opportunities and also a really high standard of living.”
“Covid has highlighted and brought to the fore the advantages of living in Cork, which means there is a lot of income in the local labour market and for those businesses who Covid has been a real struggle for, they can look forward to a significant flow of money coming back to them when it is safe to do so in the new year.”
He said that the new Munster Technology University coupled with a clear regeneration and development plan and a passionate and diverse workforce suggests Cork’s future is bright.
The economist also pointed out that data suggests that the Irish economy will be one of the only economies in the world to grow in 2020 and it might even be the fastest growing economy in the world.
This is based on the country’s GDP which is the total of consumer spending plus business investment and government spending plus net exports.
“It’s a remarkable achievement,” Mr Gibson said.
He said retail, leisure and entertainment sectors are likely to see a surge in activity in 2021 and it is important to remember the build-up of money from the protected industries, such as tech and pharma, will most likely be spent in these fields as soon as possible.
“It is always good to remember that clusters of pharma, tech and ICT that have done so well, the income that hasn’t been lost to those people during the pandemic will give a lot of energy to culture, leisure and entertainment industries that have had a tough year.
“At least there is income and wealth in the local labour market that should begin to flow out back into the market next year, so even for those who are feeling it now, the fact that there is income locally and people looking to move to the area, all of that gives them comfort that they should see some of that money in their tills and through their doors in 2021.”
Mr Gibson said that it was important to point out that the level of income that has been protected in certain sectors should mean a significant flow of money back into those local shops, restaurants, entertainment industries next year.
“The cash balances that have been built up are pretty enormous, the saving balances are pretty enormous, the savings ratio has never been this high, Ireland has never had this much money in domestic bank accounts ever than it has today and that is astonishing.
“That is all the money people couldn’t spend during the pandemic, we are talking about billions of euro in Irish bank accounts that have to find their way out.”
Mr Gibson said that people will be eager to re-engage with activities they have missed when safe to do so.
“People have missed going to the GAA, going on holidays and going for a pint and that will be built up and there will be a lot of people looking to have a lot of fun in 2021 and that is good news for all those businesses who at the moment are probably thinking, ‘is it worth opening in 2021?’.
“My message to them is I know it’s tough, but hang tight a bit longer because there is money in this labour market that will be making its way to you as soon as it is safe to do so and we should make 2021 as much about recharging, re-energising and having fun. Think of all those health care workers and how much they need a night out.
“There is a whole load of socioeconomic and psychological reasons why we need to be cheered up in 2021.
“The good news to those businesses is they are the vehicle to provide that energy and fun next year so I would say hang tight and that wealth in the Cork economy will come flooding back to them.”