On Tuesday, 21st April 2020, the Minister for Finance, Paschal Donohue delivered some very worrying news. The Minister has speculated that Ireland could be heading towards an unprecedented recession. This article will examine what the future holds for the Irish economy.
The Coronavirus has caused a rapid change in the economy for Ireland and across the world. Even in the United States unemployment is at an all time high. In Ireland, the economy has shrunk by 10.5% and one in five Irish people are currently out of work.
It has been suggested by some experts that Ireland and the world could face the deepest recession “since the Great Depression” of the 1930s, when some countries reached an unemployment level of 33%.
In recent years, the Irish economy has been growing steadily. Jobs have been plentiful and the Irish Government had been expecting to retain a budget surplus this year. But the Coronavirus is expected to have a negative effect on the economy long after lockdown restrictions are lifted.
Unprecedented levels of unemployment?
On Tuesday, the Finance Minister was quoted as saying “In the space of 12 weeks our jobs market has gone from almost full employment to a scale of unprecedented unemployment that has risen with a speed and scale that is unprecedented”.
Even compared with the 2008 economic crash, which followed the Celtic Tiger period of rapid real economic growth, the current outlook is bleak.
The Irish government predicts that the unemployment rate could hit 22%. To put that in context, the highest rate of unemployment during the last recession was 16% in Ireland, in 2012.
Unemployment and Crime
A topic of discussion that is yet to be widely discussed is the connection between unemployment and rising crime rates.
An American based study in 2015 found that a one percent increase in the unemployment rate will increase the crime rate by 14.3 per 100,000 inhabitants; with a particular increase in property crimes. With this in mind, it is an essential time to review, update or ensure that you have House Insurance.
While very little is certain in these times, you can be sure that your home and your belongings are protected with House Insurance.
If you are unsure about whether your home is fully protected, or you want to know more about a different type of insurance service, AA Insurance can help you to get a quick quote or advice.
Is there hope for the future?
Despite the overall negative outlook, there is reason to be hopeful. The predicted increase in unemployment while likely, is not a certainty.
Earlier this week, Germany and the United Kingdom approved human trials for a Coronavirus vaccine. If these trials are a success then we can combat the virus and the Irish economy could hope to recover more quickly.
If Ireland can contain the virus and start to loosen restrictions, unemployment levels should be back down towards 10% next year.
The Irish economy has faced many struggles over the years and therefore Minister Donohue is “absolutely confident” that the Irish economy can recover once again. However, given the recent years of prosperity, the Irish Government does not expect the economy to recover to where it was pre-coronavirus until 2022.
The Government’s Response
Despite the rapid downturn in the economy, one positive from the situation has been the government’s response. For example, the speed at which the lockdown was brought in has greatly aided the response to the virus. The National Wage Subsidy Scheme has also been a massive help to Irish businesses.
These types of measures from the government will help to prevent further rapid decline in the economy. Paschal Donohue concluded the meeting on Tuesday with the following statement, offering encouragement for the country:-
“There is no doubt that, along with the rest of the world, Ireland is on a difficult road. However, we face into this journey from a position of strength.
We can and we will rebuild our economy, continue to provide for society, get our people back to work and keep them safe while doing so.”
