Two sets of official figures published later today will show the devastating effects on jobs and on Government finances – with the March unemployment rate soaring to as much as 17% -- just two weeks into start of the Covid-19 lockdown.
The Live Register published this morning could see an unprecedented jump to as many as 500,000 people on this claimant count, with potentially 300,000 joining the register since the lockdown started from March 17. The CSO postponed the publication of the official unemployment rate but will issue the Live Register to take account of the hundreds of thousands applying for Government Covid-19 and income-support schemes.
The Economic and Social Research Institute (ESRI) last week said unemployment could reach 18% by early summer before falling back by the end of the year, if the health controls and the lockdown of businesses are not prolonged.
Before the pandemic hit, there were only 182,500 people on the Live Register in February, while the number of unemployed stood at only 120,100 people, or 4.8% of the labour force, on the separate but now postponed jobless count.
Dermot O’’Leary, chief economist at Goodbody, estimates the March unemployment rate effectively soared to 17%, while Conall Mac Coille, chief economist at Davy, said the implied unemployment rate could be between 10% to 15%.
The exchequer returns also published later today will dramatically show the effect on Government tax revenues in March, with Vat revenues showing “a very significant reduction”, an official said.
Vat revenues will be down significantly after households slashed spending on almost all but groceries, as large parts of the economy closed down, and also because businesses which collect Vat, have not made the payments which fell due in late March.
Last month many business groups called for Revenue to defer the Vat payment demands and it appears many small businesses, including pubs, restaurants, and cafes, have held onto any cash as they faced into the first stage of the lockdown.
Vat payments will stick out among the ‘big four’ tax sources to be hit hard, as March is a key month for the payment of Vat bills. Income tax revenues have held up well but the effects of the lockdown will likely be seen in April’s figures, it is understood.
Corporation tax revenues will also be little affected because March is not a key payment month but there will be much scrutiny of this tax source in the coming months. Some economists hope that the profits of the multinationals which account for 80% of all the revenue collected from all corporation tax receipts will be less severely hit by the pandemic.
The ESRI last week said the scale of the Government spending and the loss of revenues to the exchequer will lead to to a budget deficit of €12.7bn this year.
The National Treasury Management Agency (NTMA) yesterday reiterated plans to raise more that the €10bn to €14bn it had anticipated to tap from markets this year.
“In this respect, the NTMA is considering a mixture of issuance, including long-term funding, short-term funding and use of cash assets,” it said.