The unemployment rate will have topped 20% by the end of this week as more construction workers sign on for the Covid-19 payments, Goodbody chief economist Dermot O’Leary said.
It comes as the new CSO figures suggest that more than 513,000 people were receiving some sort of payment from the Government by the end of March — before the closure of most building sites.
Mr O’Leary said the unemployment rate had risen to 17% by the end of March from 4.8% in February and would likely rise to 20% this week as more construction workers join the claimant count.
The CSO said 513,350 people were on the official Live Register at the end of March, including 283,037 receiving the pandemic unemployment payment, and 25,104 covered by the Covid-19 income-subsidy scheme.
At a media briefing, Paschal Donohoe, the finance minister, and his top officials said that government spending and borrowing will increase to meet the costs of the crisis.
The exchequer returns for March show that the Government took in €1bn less in tax revenues in the month than it had anticipated.
VAT receipts in the month were half the level they were last year, which the department described as an unprecedented fall, and an indication of the difficulties businesses are currently facing. Total tax receipts for the month of March amounted to €3.7bn.
This is primarily attributable to a steep decline in VAT receipts as a result of non-payment arising from the Covid-19 crisis, officials said.
As a result, there was an exchequer deficit of €2.5bn in the first quarter compared to a deficit of €966m in the same period last year.
Broker Davy said the public finances took a €2bn hit from the Covid-19 crisis in March by way of additional health spending, social welfare payments, and the fall in VAT receipts.
Speaking to reporters, Mr Donohoe said that while the Government was previously expecting a budget surplus in 2020, we are “now heading for a considerable deficit” because of the pandemic’s impact.
The deficit is primarily being driven by increases in voted cernment cushions the effect of the crisis in this way,” he said.
Mr Donohoe, when asked about the likely deficit as a result of the crisis, said it was too early to say, but that he will endeavour to give such an update later this month when Ireland has to outline its budgetary estimates to the European Commission.
Asked about ongoing government formation talks, Mr Donohoe said that there was a good engagement with Fianna Fáil yesterday, and that he expects such talks to escalate next week.
He said there has been no discussion of who will be taoiseach, but that Fine Gael insisted there be parity of recognition, suggesting an equal number of cabinet seats.