Clondalkin dole office: unemployment could reach 500,000 in the near future

Unemployment will hit the once unthinkable figure of 500,000 by the end of the year, the country's leading economists now believe.

It was announced last week that the live register had risen to 353,000, or 10.4% of the workforce, and the Taoiseach Brian Cowen admitted in the Dáil that this figure would rise considerably in the coming months.

And economists contacted by the Sunday Tribune now believe the unwanted milestone of half a million, or close to 15%, unemployed is looming large.

Alan McQuaid of Bloxham Stockbrokers predicted it would hit this level at some point in the final quarter of the year and said the figure on the live register could be as high as 550,000 by year end.

Robbie Kelleher of Davy Stockbrokers agreed that unemployment "probably" was heading to the half million level by year end and NUI Galway economist Alan Ahearne told the Sunday Tribune: "On current trends, that's where it's heading".

Friends First economist Jim Power said there was now a "distinct risk that we'll see" unemployment of 500,000, although he put a slightly longer timescale of March next year on this happening.

Asked what, if anything, the government could do to try and limit the numbers going on the live register, Power stressed the importance of generating some level of economic growth.

The government had to be careful that anything it did in terms of tax increases "does not undermine growth further".

He also called for a reduction in employers' PRSI, particularly for small businesses, "aggressive" moves to bring down energy costs and a freeze, or where possible a reduction, in local authority commercial rates.

"One thing the government cannot do is undermine consumer spending any further," Power said, although he accepted that a reduction in VAT was not a near term option because of the huge cost and the limited impact it would have.

Bloxham's McQuaid also called for "some measures to stimulate the economy", adding: "The government has to try and come up with some ideas. If they don't work, they don't work...There is no point in sitting on backsides and doing nothing".

Robbie Kelleher said he did not envy the dilemma facing the government in that measures to tackle the public finances – tax hikes and spending cuts – would have the effect of taking money out of the economy. "I don't think there's an easy solution to this," he warned.

This was echoed by Alan Ahearne who said there was "no magic bullet" to solve the economic problems. "The main priority now must be putting the public finances back on a sustainable basis," he said, adding that stopping job losses would be "extremely difficult".