The 26-County state is set to experience a depression surpassing that of any other industrialised nation for over 70 years, according to official predictions.

Unemployment in the south of Ireland is set to rise to over 17%, according to the latest quarterly economic report by the Economic and Social Research Institute, the state’s economic think-tank. It predicted that 300,000 more people will lose their jobs by the end of next year as economic output shrinks by a further nine per cent this year.

Unemployment in the 26 Counties has already doubled to 11.4% in the past year, caused mainly by the collapse of the domestic property market bubble and the resulting shock-waves through the Irish financial system and the broader economy.

Combined with the global economic recession, the pump-primed, over-leveraged economy engineered by Fianna Fail Finance Minister Brian Cowen has crashed spectacularly under his premiership.

At a briefing on the report, one of the ESRI’s authors, Alan Barrett, revealed that only “countries like Zimbabwe” have registered greater financial crises than those currently facing the 26-County state.

Cowen has defended his government’s efforts to curb spiraling job losses, insisting he is doing all in his power to help the jobless. But last month, he introduced a special budget of tax hikes and spending cuts which opposition politicians warned would cripple any economic recovery.

He told the Dublin parliament this week that the employment situation would not improve until “fiscal probity” had been achieved.

“We must take the necessary decisions now. We learned the lesson that deferring difficult decisions on public finance merely prolongs the problem,” he said.

Mr Cowen said that over the past 12 months, through changes in income tax and expenditure, the Dublin government had taken approximately 8 billion Euro out of the spiraling deficit -- but every one of those policies had been opposed by the Opposition.

“There is not an easy way through this... The prerequisite for economic recovery is to get our public finances in order and that means making cuts in spending and raising taxes,” he insisted.

One of the authors of the report, Dr Alan Barrett, said the “severe recession” was due to Ireland being a very exposed economy in the midst of a global downturn -- while at the same time having allowed housing and construction generally to have become too large a part of its domestic economy.

The institute believes there may be net annual emigration of approximately 30,000 in the years to April 2009 and April 2010.

Fine Gael finance spokesman Richard Bruton said the ESRI report illustrated the economic catastrophe the state was experiencing.

“The tragedy is, the government is persisting with policies that will not address these challenges, contemptuously ignoring the warnings delivered to it on an almost daily basis,” he said.

He said a single person on the average industrial wage in Ireland will pay tax at 51 per cent from today, May 1st. He asked “how can the Government think this is a strategy for recovery”.

In sharp criticism of Government policy he said the “economic decline forecast for Ireland is twice as bad as in any of our competitor countries and the rise in unemployment is also twice as bad as any of our competitor countries”.

He said in the Dail that it was “a damning indictment of policy in this country, showing policy failure by policy makers, by regulators and by the property sector”.

Meanwhile, Minister for the Environment, John Gormley of the Green Party, has said his predictions that Ireland was “facing into the economic abyss” has come to pass.

“The Government has been aware for quite some time that we are in a very grave situation,” he said.

“This is not an ordinary recession, it is not a cyclical downturn. It is much deeper and much more profound,” he said at the launch of a carbon calculator for business.

Sinn Féin President Gerry Adams said that the current economic crisis was directly attributable to government policy.

He said the scale of the recessio had underlined the government’s failure in addressing the crisis. He said a change in political direction was needed.

“The economy has gone from boom to bust in what seems like the blink of an eye,” said Mr Adams.

“The policies of the present and previous Fianna Fail-led administrations are directly responsible for this catastrophe.

Speaking during a two-day tour of East Galway, Sligo and Mayo, Mr Adams said that in previous times of economic difficulty the counties of the west of Ireland were “asked to pay the heaviest price and were decimated by emigration and depopulation. The Government never - not even during the boom - focused on creating employment in the west.”

“What the latest information clearly indicates is that this Government is incapable of sorting out the economic crisis. But we have choices.

“There can be an egalitarian alternative to the politics of greed, inefficiency, waste and corruption. These have been the hallmarks of governments in this country for far too long.

“Ireland needs a progressive movement for change. The time is right for a new alliance of all people and parties that want real and fundamental change.

“For Ireland’s sake it’s time for this government to go.”

* The Dublin government is to hold the two Dublin byelections on June 5th, it was announced this week. The decision to hold the Dublin South and Dublin Central byelections -- caused by the deaths of Seamus Brennan and Tony Gregory respectively -- on the same date as the European and local elections was little surprise.

Veteran inner-city campaigner Christy Burke is to seek the Sinn Féin nomination to fill Gregory’s shoes, leaving the party’s Vice President Mary Lou McDonald to concentrate her efforts on retaining her seat in the European parliament.

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