Covid-19 and financial distress: ‘What we’re seeing now is only the beginning’

“What we’re seeing now is only the beginning. The true impact of what has gone on is not in any way being felt yet,” says Michelle O’Hara, regional manager for South Leinster Money Advice and Budgeting Service (Mabs).

“There is going to be, in my view, a heavy debt burden on an awful lot of people. I think that the full extent of that won’t be seen until early 2021.”

You would have thought a pilot would never be out of work, but some of them are

If rising numbers of GP referrals for Covid-19 tests act as an early warning system for an impending surge in disease, calls to the Mabs helpline operate as a red flag for a coming wave of financial distress. “The helpline is where we measure the temperature for the rest of the country.”

And she is very concerned by what that temperature reading is showing. In May 2020, the volume of calls was at 55 per cent of 2019 levels. One month later, it had increased to 88 per cent of the previous year. By the week beginning September 30th, calls were 39.1 per cent higher than in same week in 2019. Overall, September saw the highest volume of calls since 2014.

This is just the tip of the iceberg. “It will be the first quarter of 2021 before we see the big hit” in terms of financial distress, she predicts.

Calls to the helpline are coming from people in industries that never before had to engage with the service. “You would have thought a pilot would never be out of work, but some of them are. We’re seeing pilots, hospitality workers, accommodation workers, engineers, taxi drivers,” she says.

“Aviation is a big one that we’re seeing at the moment. We would have seen hospitality workers over the years,” but they always had the option to find another job, or even to emigrate. Those opportunities are no longer there.

“A total loss of income in hospitality wouldn’t have been their primary issue; now it is.”