The number of people claiming jobless benefits or wage subsidy in Ireland tripled in March, tax revenue fell sharply and the country's finance minister estimated the economic cost of the coronavirus outbreak will likely top 16 billion euros.
Ireland ordered citizens to stay home for at least two weeks last Friday to slow the spread of the virus after a gradual ramping up of restrictions from mid-March. The economic wreckage of the shutdown was laid bare on Thursday.
Acting Taoiseach Leo Varadkar said it meant the country was headed into recession.
The surge in those seeking welfare income support left the state supporting 513,350 people, or a fifth of the labour force. That is higher than the peak seen during the global financial crisis a decade ago.
While that did not impact lagging income tax receipts for March published on Thursday, a near halving of VAT returns after tax authorities said they would not punish any deferred payments, meant tax revenue fell 21% year-on-year last month.
"We are heading into a recession, not just in Ireland. As an island that is very much connected to the world, a world recession will impact on us as well," Varadkar told a news conference.
"The objective is absolutely, certainly if I have anything to do with it, to avoid another era of austerity in Ireland. The period of austerity that happened after 2008 was never a policy choice, the country lost the capacity to borrow... We think this time is going to be, but we can't know for sure at this stage."
Finance Minister Paschal Donohoe has set aside 6.7 billion euros to support the economy and said on Thursday that would "definitely" rise to at least 8 billion euros, with the level of tax revenue foregone as a result of lower economic activity set to be higher still.
That will turn an estimated budget surplus of 0.7% of gross domestic product forecast for 2020 as recently as January into a "considerable" deficit, Donohoe said.
Ireland has reported 3,849 coronavirus cases and 98 deaths, but the rate of increase in infections is slowing.
Ireland's live register, which measures demand for regular jobless benefits, rose to 207,200 from 182,800 on a seasonally adjusted basis. However, a further 283,037 sought the higher 350 euro weekly unemployment emergency payment for those who have lost jobs or had hours cut due to the disruption.
Another 25,104 workers claimed the temporary COVID-19 wage subsidy in the first three working days of the scheme that allows struggling employers to ask the state to pay 70% of workers' wages. Almost 36,000 firms, which can top up the payment, had registered by the end of Wednesday, Donohoe said.
During the financial crisis a decade ago, which hit Ireland hard, it took three years for jobless claims to reach a peak of around 450,000. Just three weeks were needed this time to top that.
Analysts say the April numbers will be even worse.
Ireland's Economic and Social Research Institute (ESRI), an independent think tank partly funded by the state, predicted last week that unemployment could soar to around 18% on the back of a 7% economic contraction this year.
Ireland's economy grew by 5.5% last year and Moody's ratings agency said this week the country's credit profile is set to remain relatively resilient if the crisis is relatively short-lived.
"Once the virus is under control, it is expected that the economy can and will recover quite rapidly," Donohoe said. (Reuters)