Covid-19 restrictions reduced tax revenues by €3.6bn in 2020

Covid-19 restrictions reduced tax revenues by €3.6 billion last year and while unemployment has improved since the depths of the crisis, it remains at 12.4 per cent.

Comprehensive social and economic data produced by the Central Statistics Office (CSO) has delivered a numerical insight into how the pandemic has affected Ireland over an 18 month period.

The economic picture has been bleak. While tax revenues last year took a hit as a result chiefly of reduced VAT receipts and the waiver of commercial rates, a decline in overall business activity has been a more visible indicator of the crisis.

Unemployment bottomed out at 4.5 per cent just before Covid-19 reached Irish shores. In March of 2020, public health measures introduced by the Government stifled activity and accelerated the rate to 31.5 per cent within a month.

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With varying outbreaks and reactionary measures, that rate fluctuated to 16 per cent in September, and rising to 27 per cent last January before easing off over the summer.

It comes as little surprise that employment across tourism, hospitality, food service, retail and construction were hardest hit - a “more striking illustration” of how bad things got, according to the CSO analysis, is that there were almost 7.6 million fewer hours worked per week in the year leading up the first quarter of 2021.

“This almost 10 per cent reduction in hours worked was most pronounced in the hospitality, construction and other service activities sectors which include culture and recreation,” it said.

Retail sales fell by 10 per cent in March 2020, followed by a decrease of more than 37 per cent the following month. The subsequent two lockdowns had a less severe impact of 12 per cent in November and 20 per cent in January 2021. However, by July this year overall retail sales were 14 per cent higher than in July 2019.

The data also highlights a substantial shift in retail activity to online, with sales activity jumping from 3.3 per in 2019 (on average) to a peak of 15.3 per cent in April the following year.

Government subsidies to households were up €1.1 billion (driven by the Wage Subsidy Scheme) and social protection payments grew by €2.7 billion (largely due to the Pandemic Unemployment Payment) in the first quarter of 2021.

More than half of small and medium sized enterprises (SMEs) closed at some point last year.

In terms of social movement, car traffic volumes are now at 87 per cent of July 2019 levels in the Dublin area. And while the number of passengers travelling through airports last July was 61 per cent higher than in July 2020, the volume of people coming in and out of Ireland remains 82 per cent lower than in pre-pandemic 2019.

When Covid restrictions were first implemented in April 2020, three in ten people rated their overall life satisfaction as low. After restrictions were eased the following August that dropped to just over two in ten.

In November 2020, during the second wave of Covid and the corresponding Level 5 restrictions, the rate shot up to 35.6 per cent, all of which gives valuable insight into how the measures affected mental health. The comparable rate in 2018, at a time when the economy was growing strongly, was 8.7 per cent.

In the first three months of this year there were 1,846 deaths due to Covid-19, accounting for almost one-fifth of all deaths.