Locked down: Dublin’s Moore Street. Photo: RollimgNews


Stephen Kinsella: Recovery is a tale of three letters – V, U and L

What does the recovery look like? We keep on hearing on recoveries based on the alphabet, but what would each mean for the economy? The answer depends on what we do now and what happens to the virus.

14th May, 2020 - 6 min read

Look at the chart below. It shows three possible futures and one definite future past. We begin with a toy economy growing at 2% per year forever. It begins with a national output of €100 and grows steadily thereafter. The first line shows us the future-past. It is the future we all voted on in February, the one where we had €11 billion to allocate to all the things we thought most important. This future no longer exists, thanks to Covid-19. In February our unemployment rate was below 5%, today it is above 28%. In February our largest problem was choosing between spending more on housing, or more on health. That’s gone too. Now we have to spend more on health...

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