A LEADING economist has said that public spending is due to "surge" as the Government moves to mitigate the worst effects of the coronavirus crisis.
Richard Ramsey, chief economist at Ulster Bank, was speaking as the pound hit its lowest point in 35 years after traders flocked to the safety of the US dollar as global markets reel from the Covid-19 pandemic.
Sterling was down by as much as 4.4% against the greenback yesterday, with one pound buying only 1.153 dollars, after its value tumbled further in afternoon trading.
It marks the lowest point for the currency since 1985, when the US deliberately devalued its currency.
Analysts said that it was perhaps misleading to speak of a falling pound, as the story was more about a rising dollar.
"In a crisis like this, king dollar reigns supreme," said Neil Wilson, chief market analyst at Markets.com.
Ranko Berich at Monex Europe, a foreign exchange firm, said: "Idiosyncratic factors such as the UK's monetary and fiscal response or Brexit are beside the point: this is about the US dollar, which is proving unstoppable as global financial markets stare into the abyss of crisis-like conditions."
Commenting on the financial fallout from the global and domestic efforts to slow the spread of coronavirus, Mr Ramsey said: "The Government is acting like an insurer of last resort here.
"The scale of this is huge and equates to 15% of UK GDP.
"Smaller firms will have access to business interruption loans worth up to £5m with no interest for the first six months.
"Cash is king, though for many firms more debt is not the real answer, and for many firms the king is dead - cash has run out, demand has stopped.
"The hospitality sector locally can attest to this, as well as the airline industry globally.
"This isn't an economic slowdown but an economic stop.
"The Chancellor did unveil new measures for cash flow support and Northern Ireland businesses have been waiting eagerly to find out how that translates locally.
"Northern Ireland's Secretary of State Brandon Lewis has said the additional funds to Stormont amounted to £640m and the Finance Minister Conor Murphy quickly responded with a rates relief announcement for all businesses.
"The Northern Ireland scheme is spread wider but thinner and is only for three months, not 12 months. The problem is, firms need cash and income, not cost reductions."