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Covid-19 has had a huge impact on economies globally. It has led to large increases in unemployment and put businesses everywhere under enormous financial strain.

In recent months however, hope of recovery has grown and countries seen to be exiting the pandemic have witnessed large increases in hiring rates especially in sectors such as services.

In this regard, the pattern of economic recession and recovery is undoubtedly similar to the financial crisis of 2008. However, there are also key differences that are significant for SMEs.

Professor Alan Ahearne, Director of the Whitaker Institute at NUIG, helped guide the Irish government out of the financial crash of 2008, and in July 2020, was appointed as special economic adviser to Taoiseach Micheál Martin.

In Association with

Speaking on the important business impacts and opportunities associated with Covid-19, Prof. Ahearne’s webinar forms part of a content series from InterTradeIreland’s All-island Innovation Programme, which aims to give SMEs engaged in cross-border trade, access to cutting-edge thinking through practical business advice.

As we exit the latest lockdown, we examine why his message is still relevant.

Covid-19 vs. 2008: The key differences

The financial crash of 2008 led to credit and budget deficits that could only be filled by raising taxes and cutting spending, which in turn, added to the economic downturn. This most critically affected the financial and construction sectors.

Prof. Ahearne explains that the industries most critically impacted by the pandemic were consumer-facing sectors such as tourism and hospitality, leisure, personal services and some retail.

The key difference between Covid-19 and 2008 has been that throughout the pandemic, governments were able to borrow to support the economy without having to resort to higher taxes and expenditure cuts. Signs of growth in these sectors is reason for optimism.

As we begin the recovery stage, now is the time for SMEs to bounce back and re-enter productive and growth phases in their businesses

New normal business opportunities

Tourism

The tourism sector has been heavily challenged by the pandemic, but continued travel restrictions will encourage domestic tourism. SMEs should be thinking about the opportunities to capture value from this market, not only to support recovery but also for long-term growth.

Supports and advice for Irish businesses in the tourism sector are available here.

The Green Economy

Climate change is a pressing issue and governments need to enable a green recovery in order to become low-carbon economies. This means opportunities exist for businesses to adapt re-brand and ‘ride the coattails of the green economy’.

InterTradeIreland has committed to enabling businesses to adapt to a low-carbon economy through initiatives including Synergy, which has supported projects such as the Irish Bioeconomy Foundation on an all-island biomap.

“The key to success in the transition to low-carbon economies will be cross-border collaboration,” said David Burns, Science, Technology and Innovation Manager at InterTradeIreland.

“New breakthroughs in science and technology will be needed to address the unmet challenges in achieving low carbon and ultimately circular economies. Collaboration across the island of Ireland will be crucial to realising those goals.”

Localised supply chains

Global supply chains were interrupted during the pandemic and many think this may lead towards de-globalisation. This means a shift towards more localised supply chains, with businesses producing locally and consumers buying more locally – ultimately providing business security.

This is supported by data from InterTradeIreland’s All-Island Business Monitor, which shows that in the last year 35% of firms have made changes to their import supply chains to limit disruption to their business. One in 10 of those have shifted to sourcing components locally.

Kerry Curran, acting Director of Strategy and Policy at InterTradeIreland, suggests this trend is likely to continue in 2021 and beyond. “As businesses strive to be competitive in a rapidly shifting market, gains made from supply chain adjustments will likely remain a strong feature in the months and years ahead.”

Prof. Ahearne therefore advises businesses to remain flexible, adapt where possible and “grab these opportunities by the horns” in order to prosper in a post Covid era.

Health and wellbeing

Covid-19 threatened the health and wellbeing of people across the world, which has made us more health conscious than ever. Opportunities are therefore arising for business to create products, services and experiences that offer real wellness benefits. Surges have been seen already in parts of some sectors such as leisure, with more people taking part in activities than ever before.

How to get support

A key ingredient for prospering in recovery is “agility and adaptability”. Prof. Ahearne also explains that SMEs need to find a way to tap into consumer savings.

SMEs need to examine and act on changes in consumer trends and spending. One thing the pandemic has revealed is the surge in e-commerce and online sales. For companies who wish to develop their online sales and marketing, business supports and funding are available through the E-Merge programme.

For SMEs looking for ways to drive growth and recovery, cross-border trade can be a lucrative opportunity and both InterTradeIreland’s Acumen and Elevate programmes can provide funding to do so.

+ Contact us today for more information on business supports from InterTradeIreland

Caption: InterTradeIreland has helped companies such as Sweetspot Sourcing to build its cross-border trade. Pictured are company directors/owners Susan Dempsey (left) and Fiona Craul (Pic: Michael Donnelly)