Goverment urged to ease off on austerity

Merrion stockbrokers is calling on the Government to ease off on austerity to stimulate growth.

Merrion’s chief economist Alan McQuaid said: “We think we have a greater chance of generating the economic growth we need to meet our budgetary targets over the next few years by easing back on the austerity, and so would support the call of Ibec for a more lenient approach from Michael Noonan, particularly on the taxes side.”

Merrion stockbrokers says while the Irish economy can be steered by the annual budget, it remains subject to the international markets.

Mr McQuaid pointed to the pick- up in activity in the UK economy, which he said will have a positive impact on the Irish economy.

However, Ireland suffered from the fall-off in international growth earlier this year. “Irish GDP growth in the first quarter came in much weaker than expected with the economy technically back in recession,” Mr McQuaid said.

He said until there is an upturn in the world economy Ireland will likely remain “an economy performing well below its potential”.

On the upside Mr McQuaid believes unemployment has peaked and should begin to fall from this year: “Last year is forecast to be the worst of it, with the jobless rate appearing as though it has peaked. We are looking for some improvement in 2013 with the average unemployment rate projected to fall back to 13.6%.”