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Maynooth University
Wake-up call? Amid the doom and gloom of a Covid-inspired recession and widening inequality, one Maynooth alum is sounding an optimistic note about long-term, structural change in Western economies 1998
Brian O’Reilly BA, 1998 Head of Investment Strategy, Banca Mediolanum
U
nusual may be the understated adjective of the year to describe 2020.
But when Brian O’Reilly describes the nature of the economic fallout following the onset of Covid-19, it’s both apropos and perhaps even a bit encouraging. “It’s been an extremely unusual recession,” says O’Reilly, the Head of Investment Strategy at Italian investment bank Banca Mediolanum. “First it was a health crisis, which quickly became a very sudden economic crisis. The global economy just stopped – we’ve never seen that before. What’s also unusual are the extremes to which authorities have been willing to plug the gap. Central banks have kept things rolling by slashing interest rates, allowing governments to borrow, and governments have paid private employees directly through various pandemic support schemes, so the fallout could have been much worse.” Still, says the 1998 Maynooth finance grad now back living in Dublin after time in New York and London, there will come a time to pay the bill. O’Reilly believes that will likely mean higher taxes on corporations and individuals in high income brackets. He sees a shift, a reckoning even, coming in terms of widening wealth gaps and economic inequality across Ireland, the US and other western countries.
“The big issue worrying governments around the world is the growing wealth gap. I’m not sure how much longer it will be tolerated anymore.” O’Reilly points to data showing that the Covid-caused recession has disproportionately affected those making the least. That’s hardly unusual in an economic downtown, but O’Reilly has cause to think this time the after-effects may be different. “I think this crisis will be a wake-up call. The so-called K-shaped recovery – where the less well-off are faring worse, while the more well-off have been the main beneficiaries from stimulus which has propelled the stock market higher, particularly in the tech sector. I think we will get more policies post-Covid to help bridge the gap.” “One such focus is higher tax. Ireland’s low corporate tax rates were the right thing to do 30 years ago to attract jobs to Ireland, but over time the gap has probably gone too far. Multinationals will have to pay more. People and societies won’t tolerate companies paying little or nothing for much more. We need to fix housing and health, but structurally, Ireland is a very strong economy, with a very young population that is highly educated. The US multinationals like doing business with us, and Irish people tend to do well in multicultural environments. We should be confident in what we have to offer and that we will still attract international firms here without the need for extremely low tax rates.”
