Farewell and good riddance - it's been a year of money ups and downs
“How will it all end…?” my friend asked earlier this month.
I wasn’t sure whether she meant the pandemic or just 2020, a year like no other - full of surprise, dread, bewilderment, hope, disappointment, boredom dashed with expectation.
Now that the Covid-19 vaccines are on their way, I think it is fair to think that 2020 is ending in huge anticipation that Christmas 2021 will be a sight more sociable than this version.
This week last December I was on my way home from Venice, a city I fell in love with five years ago and have been visiting for a month each year ever since. That trip began just a fortnight after the great November flood that caused billions of euro in damage and emptied the city of its usual holiday tourists and trade.
Café’s, restaurants, shops, churches all over the fragile city were closed for repairs and thousands of flooded residents were also either filling in insurance claims or applying for very modest government emergency assistance payments.
Without tourists, Venice has no income, so reliant are they on this single sector. Yet for all its ‘success’ these past 30 years or so in earning huge profits for the BnB owners, the sellers of knock-off masks and glass tat and the overpriced, dreadful fast food places that proliferate, those same hordes of tourists (as many as 30 million) have driven out all but c50,000 of its inhabitants and artisans.
Even so, by the time I left a year ago, the people I spoke to hoped that they’d reached a turning point and that they might be on the road to a more sustainable form of tourism in the Spring/Summer of 2020.
Within days of their Covid lockdown last March it was apparent that Venice was in deep trouble. It has become the sad poster child for every heavily dependent tourist destination. La Serenissima – the Serene Republic that lasted 1000 years – was already well acquainted with plagues and quarantines, but nine and half months into this 21st century version, it is a ghost-town (except for a trickle of Italian tourists on the weekends), everyone’s savings are depleted and it will take more than the Italian government version of business subsidies and PUP payments to slow down the exodus of its remaining, few young people.
If the 2020 great pandemic has shown us anything, it is that employment diversity is the key to survival and that even the most successful tourism and hospitality hotspots need a mixture of other businesses, especially high paying financial, IT and bioscience businesses to keep everyone afloat when a calamity (whether man-made or an act of God) strikes.
The phenomena of shifting populations post-pandemic that has already begun – from expensive cities to lower cost rural areas – is going to make it a lot easier to attract and set up the higher value intellectual property businesses that the IDA and Enterprise Ireland may have struggled before now to secure outside Dublin, Cork, Galway and Limerick.
Individuals also learned some hard lessons in 2020 about their own resilience and flexibility. Low skill ‘essential’ jobs in retail food/grocery services and some other retail, health care and other public services but it is still better to aspire to jobs in finance and information technology and especially in health science. Watch the Leaving Cert entry points for science and IT soar in the next few years.
We have also learned, that multiple lockdowns can be great for debt reduction and savings accounts, even if the deposit takers no longer reward your prudence with a respectable reward.
We’ve also learned the difference between ‘needs’ and ‘wants’ and how being able to meet with your family and socialise with friends whenever we want beats mindless consumer spending, using other people’s money.
The official cost of living fell below 1% since the Spring, though electricity, home heating and private healthcare costs continued to rise, partly due to the ‘hidden’ higher government levies and charges. The cost of food, housing and transport have all fallen, as have interest rates though borrowing costs are still quite a bit higher here than in the rest of the eurozone.
This may have helped increase household savings, but falling prices can also be an indicator of economic recession. Not every indebted business is going to survive once the cheap credit is rolled back. (Airlines? Auto manufacturers? Commercial property?)
Perhaps the more appropriate question my friend should have asked was, “How will it turn out…?”
I don’t have a crystal ball, but the Irish exchequer will have borrowed tens of billions to keep the nation’s lights on. Even if a short term spending boom happens once mass vaccinations are completed and our Sleeping Beauty economies are woken up, there will still be a great big global butcher’s bill to pay.
I’m also going to guess that New Year’s resolutions may carry a bit more weight in 2021 than in previous years…
Letters to firstname.lastname@example.org The TAB Guide to Money Pensions & Tax 2021 will be appearing next month in all good bookstores. See www.tab.ie for ebook edition.