Solving the economic crisis will be dependent on our ability to manage the health crisis as a healthy economy needs a healthy workforce, healthy consumers and a healthy community – Governor Makhlouf

• Latest COVID-19 restrictions will have negative implications for individuals, households and businesses, for their incomes, their consumption patterns and their investment plans.
• Decline in domestic demand likely to be larger than Central Bank forecasts but activity will continue to recover gradually next year, although domestic-focussed economic activity remains unlikely to return to its pre-pandemic levels before 2022.
• For borrowers affected by the pandemic, lenders must put in place appropriate, sustainable solutions to facilitate them to repay their debt. In particular, lenders should adopt interim measures to support borrowers experiencing temporary income shocks.

The Governor of the Central Bank of Ireland, Gabriel Makhlouf, Deputy Governor Ed Sibley and Director General, Derville Rowland have today (21 October 2021) appeared before the Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach.

In his Opening Statement, Governor Makhlouf provided an overview of the Central Bank’s assessment of the impact of Level 5 restrictions, saying “The latest restrictions announced by the Government on Monday evening clearly have negative implications for individuals, households and businesses across the country and for their incomes, their consumption patterns and their investment plans.  Ultimately, solving the economic crisis will be dependent on our ability to manage the health crisis as a healthy economy needs a healthy workforce, healthy consumers and a healthy community.   

“The decline in domestic demand that we forecast for 2020 is likely to be larger than what we published in our Quarterly Bulletin two weeks ago but, on the assumption that the latest measures will be time-limited and that consumers and businesses continue to adapt, our forecast is for activity to also continue to recover gradually during next year, although domestic-focussed economic activity remains unlikely to return to its pre-pandemic levels before 2022.”

Governor Makhlouf also referred to the potential impact of Level 5 restrictions on Irish borrowers.

“The economic shock has left many business and personal borrowers facing difficulties in meeting their repayment obligations. We recognise that that this is a worrying time as we move to Level 5”.

“We continue to engage with the BPFI and with lenders. Our clear expectation is that lenders engage effectively and sympathetically with distressed borrowers – in line with the Code of Conduct on Mortgage Arrears, the Consumer Protection Code and regulations for firms lending to SMEs – to deliver appropriate and sustainable solutions and facilitate as many of them as possible to return to repaying their debt.  In particular, in the current environment we expect lenders to adopt interim measures to support borrowers experiencing temporary income shocks when the financial position of the borrower is not yet assessed or where more permanent solutions are being determined.”