The onset of the pandemic had catastrophic consequences for the Irish economy, plunging it into a recession. Lockdowns and other measures announced by the government resulted in high rates of unemployment, including the highest increase ever recorded in March 2020. Just a month later, more than 1 million were receiving state support payments.
Businesses that were worst hit included those in leisure, travel, and hospitality. The government intervened with a number of financial aid packages and grants for small businesses, plus extra financing for larger firms. As recently as the first week of February, the state announced an additional EUR 160 million in additional support funding for those businesses, big and small, that were impacted by the pandemic.
The economic fallout in the UK was also severe, but not quite as bad as in Ireland. Charities noted a GBP 4 billion drop in funding as donors’ purse strings were tighter and fundraising events were cancelled. The Government provided economic stimulus packages in the hopes of preventing a recession but this wasn’t enough to prevent it.
Interest rates were slashed to 0.10%, the lowest rate in the history of the Central Bank. As the country entered a recession, analysts said it would be the worst in 300 years but that recovery would occur in 2021. Despite this, the unemployment rate remained less than that of Ireland.
How it affected the markets
As for the financial markets, they were in turmoil during 2020. The stock market, foreign exchange market, commodities market, and even cryptocurrency were all impacted in various ways by the pandemic.
The FTSE 100 experienced its worst year since the global financial crisis in 2008. Traders hoping to speculate on changes to it have closely watched the FTSE 100 futures in online charts: the value of the index fell by 14.3% over 12 months, showing significant decreases in the value of some of the world’s largest stocks. There were some gains to be seen however as some stocks bucked the trend and went on to achieve significant growth. B&Q the DIY chain saw a really of 53% and did online betting companies, grocers, and tech companies specialising in online and remote entertainment.
In terms of the relationship between EUR and GBP, things were strained not just due to the pandemic, but because 2020 was the year the UK crashed out of the European Union, of which Ireland remains a member. This provided opportunities for investors to cash in on the volatility of the pair over the course of the year.
Success stories
It wasn’t all bad news for Ireland during 2020. A number of Irish startups actually managed to raise funds despite the pandemic. Started in 2012 at NUI Galway, Aquila Bioscience was one of these. It works in the fields of immunology, biochemistry and analytical chemistry research. They managed to get some EUR 314 of EIC funding in June 2020.
Another success story was Buymie, a same-day food and grocery delivery platform that was launched in Dublin in 2015. In line with the trend of online shopping and home delivery for groceries, they experienced growth and were able to partner with Lidl in Ireland and Co-op in Bristol, England. They also managed to get almost EUR 6 million in funding to help them on their way.
Other successes include Kastus (germ-killing coating effective against COVID-19), LetsGetChecked (at-home health testing startup), RemedyBio (nanoscale biotechnology company), and Scurri (platform to help retailers optimize online ordering services).
2020 was a difficult year but the successes show that there is still hope. Furthermore, the general consensus between analysts is that the financial slow down will be short-lived and we can expect to see brighter times ahead.