Irish unemployment hits 18-year high of 14.9 pct

July 4, 2012 - 9:38 AM
Ireland Financial Crisis

In this Sunday, July 1, 2012 photo shoppers pass a musician performing for spare coins on Henry Street in Dublin, Ireland. Consumer spending has slumped since 2008 in line with Ireland's fiscal crisis, during which the government has spent tens of billions nationalizing its debt-crippled banks and risked national bankruptcy itself. Ireland's treasury plans this week to hold its first sale of debt securities since the country's 2010 EU-IMF bailout and hopes to resume normal borrowing next year. (AP Photo/Shawn Pogatchnik)

DUBLIN (AP) — Ireland's unemployment rate rose to an 18-year high of 14.9 percent in June, underscoring the country's struggle to stimulate economic growth in the face of austerity measures, government statisticians reported Wednesday.

The rising joblessness could have been worse but for Ireland's tradition of mass emigration in times of economic hardship. The Central Statistics Office says about 76,000 left this country of 4.5 million last year for stronger job markets in other English-speaking countries — chiefly Britain, Australia and Canada — and the trend has continued this year.

Irish unemployment rose from 14.7 percent in May. It last reached 15 percent in March 1994, the year that Ireland began its first extended economic boom, becoming known as the Celtic Tiger.

That stellar economic expansion slashed unemployment and spurred Ireland's first-ever wave of immigration, but much of the growth proved to be fueled by cheap eurozone credit and property speculation. Boom turned to bust in 2008 when the global credit crunch exposed reckless lending at Irish banks, forcing the government to nationalize five of them at a crippling cost. Ireland's European Union-International Monetary Fund bailout followed in 2010.

While Ireland's economy has officially eked out tepid growth thanks to export strength by Irish-based multinationals, economists say those headline GDP figures mask unrelenting recession in the real domestic economy.

Merrion Stockbrokers in Dublin published an economic outlook for Ireland that foresees a further 1.5 percent fall this year in consumer spending, the fifth straight year of contraction. It says households are cutting back in part because so many are trapped in negative-equity mortgages on homes they can't sell, with prices set to fall another 13.5 percent this year.

But the outlook says Ireland's effort to cut its EU-leading deficits is bearing fruit four years into a string of emergency austerity budgets. It says Ireland should be able to post a 2012 deficit of 8.0 percent of GDP because of higher-than-expected tax collections.

That would be better than the bailout plan's goal of a 2012 deficit of 8.6 percent. EU and IMF officials say they want Ireland's deficit back below the EU's official limit of 3 percent by 2016, but Ireland says it intends to reach this goal by 2015.

Ireland's government says the deficit must be tackled credibly to reassure creditors and permit Ireland to resume normal borrowing on bond markets at affordable rates by mid-2013, before its bailout funds run out. But business chiefs complained Wednesday that the government's austerity drive was self-defeating, because it was destroying jobs.

Avine McNally, assistant director of the Small Firms Association of Ireland, said the rise in unemployment was "disappointing but not surprising."

"Only when businesses feel more confident will we start to see businesses invest, grow and create employment," said McNally, whose group represents 8,000 businesses employing fewer than 50 employees nationwide.