IBEC report shows record high for household incomes as economy hits 'sweet spot'

Household incomes are at record levels, according to a new report from business group IBEC.

They are growing by 6% while people's disposable income has also reached a new high.

IBEC says the economy is in a "sweet spot" and is due to grow by 4% this year.

However, it has warned employment growth will slow as the country nears full employment and companies struggle to fill vacancies.

They said the Irish economy is set to slow in 2020.

"These rising incomes are underpinned by exceptional levels of business investment, and related employment effects, rather than household borrowing", it said.

But IBEC warned that this pace of growth will not last "indefinitely", as the global economy shows signs of slowing.

It forecasts that growth will moderate to 2.7% in 2020, as both the Irish and global economies reach a "mature stage of the business cycle."

These forecasts assume a deal on Brexit is reached.

"In the event of a no-deal Brexit, we expect significant impacts from a sterling depreciation, cancelled investment, falling consumer confidence, rising prices, and significant trade disruption throughout late 2019 and 2020."

It said the economy may still grow - but growth would more than halve in 2020 and employment growth could fall as low as 0.5%

IBEC's head of tax and fiscal policy, Gerard Brady, said: "The Irish economy is in a sweet spot, with growth in employment and wages both hitting close to 3% in 2018.

"No other economy in western Europe had greater momentum coming into 2019, but this pace of growth will not last indefinitely.

"The six months of additional time given to the Brexit process is welcome as it avoids an imminent cliff-edge situation.

"However, it has also left business to manage the rolling, and costly uncertainty.

"Outside of Brexit there are signs of a slowdown coming in many of our other key trading partners.

"Germany has flirted with recession over recent months, Chinese growth last year was its lowest since 1990, and US financial markets are beginning to show signs of strain. Any global slowdown is certain to cool the growth of our exceptionally open economy."

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