| 11.3°C Belfast

Taoiseach hopes to avoid return to austerity after Covid-19 crisis

Leo Varadkar said the economy was in better shape than after the collapse of the Celtic Tiger.

Close

Taoiseach Leo Varadkar (leon Farrell/Photocall Ireland/PA)

Taoiseach Leo Varadkar (leon Farrell/Photocall Ireland/PA)

Taoiseach Leo Varadkar (leon Farrell/Photocall Ireland/PA)

The Taoiseach has expressed hope that Ireland’s looming recession will not result in another era of austerity.

Leo Varadkar said the relatively good state of the economy going into the sharp downturn triggered by coronavirus would help make the recovery less painful than it was following the crash of the Celtic Tiger in 2008.

The deaths of another 13 patients with Covid-19 in the Republic of Ireland were announced on Thursday, bringing the total number of deaths to 98.

There were 402 new cases of coronavirus confirmed, with the total number now at 3,849.

Unemployment has soared to 17% in just a month, with almost 300,000 people claiming a new government Covid-19 unemployment benefit.

Close

(PA Graphics)

(PA Graphics)

Press Association Images

(PA Graphics)

The total number of unemployed now sits at around 500,000.

Government tax receipts plummeted in March and are set to fall further in April.

On Thursday, Tanaiste Simon Coveney said that restrictions in place to help curb the spread of coronavirus may remain in place “for some time”.

The measures were ordered by the Government amid fears that critical care hospitals could be overwhelmed by cases.

People have been ordered to remain in their homes in all but a limited set of specific circumstances until Sunday April 12.

Mr Varadkar said it not be possible to be more definite on how long restrictions would apply until data became available next week indicating how successful they were being in limiting the infection rate.

But he insisted Leaving Cert and Junior Cert school exams would be held “by hook or by crook” in the summer, highlighting that a “number of options” were being considered.

As a post-Cabinet news conference in Dublin, he said it was no secret that the “economic picture is very bad”.

“We’ve experienced in the last two weeks a sharp sudden an unexpected shock to our economy,” he said.

“The number of jobs lost in the past week or so was lost over a period of three years during the economic and financial crisis of 2008 onward.”

The Taoiseach added: “We’re facing a public health emergency, which in turn is leading to an economic recession.

Close

Social distancing signs in Phoenix Park, Dublin (Aine McMahon/PA)

Social distancing signs in Phoenix Park, Dublin (Aine McMahon/PA)

PA

Social distancing signs in Phoenix Park, Dublin (Aine McMahon/PA)

“Essentially, in order to stop the spread of this virus, we’ve had to put our economy to sleep, our economy’s in hibernation.

“But we’re already preparing for the recovery, because we want to make sure that when our economy wakes up, that it wakes up and is back to full health and roaring again within a few months, if that’s possible.”

Mr Varadkar continued: “The objective absolutely, certainly if I’ve anything to do with it, is to avoid another era of austerity in Ireland.”

He said preferred policy would see the economy stimulated with an increase in spending and focused tax cuts to encourage growth.

Mr Varadkar said that would involve increased borrowing on international bond markets.

The Taoiseach said that had not been possible following the last crash because Ireland lost its ability to borrow on the bond markets and was forced to secure support from the International Monetary Fund and European Central Bank.

He said that money was only available on the condition that austerity policies were introduced in Ireland to pay it back.

“So our objective, when it comes to this new recession and dealing with this new recession, is to avoid a period of austerity,” he said.

“I believe we can avoid it this time because the country is in a stronger position – we went into this crisis with a well-balanced economy, with public spending under control, with a debt that was going down and with a budget surplus and with reserves.

“But really nobody can know that yet.

It’s only when this crisis ends, when we count the cost, when we work out what it would cost to stimulate the economy again, that we can then find out whether we’ll be able to borrow that kind of money, and we just won’t know that for a few more months.”

PA