The European Commission’s latest forecast predicted Ireland’s gross domestic product (GDP) would slump by 7.9 percent as the nation plunged in to a “recession of historic proportions”, like the rest of the EU, amid the coronavirus crisis. The report said Ireland was “clouded by a higher than usual degree of uncertainty” which is compounded by other issues including Brexit and internal taxation changes as millions of Irish citizens feel the economic bite of the invisible killer disease, which is spreading panic across the globe.
An EU source said: “We see three big risks. One is generally associated with pandemics, and its development.
“We also see Brexit as a continuous risk because at this stage we evidently still don’t have an agreement so it remains an important risk
“The last one is… on taxation.”
Ireland’s unemployment growth would also be cut by 2.5 percent, according to the Spring forecast, and rise by 7.4 percent as the entire country is shut down to stop the spread of COVID-19.
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But it was not all bad news as the report predicted Ireland’s economy would bounce back and expand by 6 percent in 2021 after the coronavirus pandemic and unemployment levels would also recover by next year.
The report also predicted that private consumption would slump by 9 percent this year and recover by 4 percent in 2021.
The forecast said: “Ireland has banned construction works since late March, while investment in equipment and other areas is likely to be postponed or even lost.
“The negative outlook is corroborated by confidence and other activity indicators, such as credit card use, which suggest a large contraction in economic activity since the lockdown.”
Commenting on the figures, Paolo Gentiloni, European Commissioner for the Economy, said the coronavirus posed a threat to the single market.
He added: “Europe is experiencing an economic shock without precedent since the Great Depression.
“Both the depth of the recession and the strength of recovery will be uneven, conditioned by the speed at which lockdowns can be lifted, the importance of services like tourism in each economy and by each country’s financial resources.
“Such divergence poses a threat to the single market and the euro area – yet it can be mitigated through decisive, joint European action. We must rise to this challenge.”
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It comes after as Taoiseach Leo Varadkar took part in a European Council meeting on the COVID-19 outbreak on Wednesday morning with other EU leaders.
Mr Varadkar said they had spoken about a potential mutualisation of debt, known as coronabonds, but there was not unanimous support for such a plan.
Member states remain divided over how the fund will work, with an impasse over calls by some of the worst-hit countries for mutual sharing of the debt incurred battling the coronavirus crisis.
Speaking in the Dail on Wednesday, he said: “The idea was to take a shared approach to managing debt arising solely from this crisis.
“Such an approach would have required a legal underpinning not currently provided for in the EU treaties.
“I accept that it would have take a long time to agree this, even more time if it were to be approved by all EU member states and even in ours where it would require a referendum.
“In the absence of unanimous support for that approach, we agreed that alternative solutions for a recovery fund should be developed.”
He said the European Commission is building a stockpile of medical equipment to be distributed to member states.
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