The IMF has admitted it completely underestimated the effects of austerity on the Irish economy and believed the tax increases and spending cuts would not have cost so many jobs.

A record 7,593 new clients were dealt with by the Money Advice and Budgeting Service in the first quarter of the year, with personal loans the biggest problem.

Recessions and housing slumps are worse when preceded by a buildup of household debt, says the IMF.

THE Government won’t default on its debts, said Cambiz Alikhani of the Iveagh Wealth Fund, which manages some of the Guinness brewing family’s fortune.