Unemployment To Reach 17% By 2010

The Economic and Social Research Institute says Ireland Could be facing an unemployment rate of 17% by 2010.

The forecast suggests another 300,000 Irish jobs will be lost before economy starts to recover.

Ireland's gross national product is expected to fall by 9.2% as production falls due to the high levels of unemployment. Wages are also expected to fall by 3% by the end of the year.

The forecast is the ESRI's gloomiest forecast so far, but it does expect some recovery by next year. However, living standards are expected to reach 15% lower than in 2007 before any signs of rejuvenation begin.

The recession predicted is significantly worse than the Government assumed in the Budget with the report saying the Government will lose an additional €1.3bn in tax receipts this year.

A spokesman for the ERSI said: "Our forecasts suggest that Ireland's economy will contract by around 14% over the three years 2008-2010. By historic and international standards, this is a truly dramatic development. Prior to this the largest decline for an industrialised country since the 1930s had been in Finland, where real GDP declined by 11% between 1990 and 1993."

However not all the news was negative. The ERSI added: "In the General Assessment, the overall negative picture is noted but we also draw attention to some positive developments since our winter Commentary.

"Our assessment of the fiscal measures introduced in February and April is broadly positive and we see these as important moves in the direction of restoring fiscal sustainability."

(DW/BMcC)