Economy fears 'a little overcooked'

Fears about the economy may have been overcooked, business leaders claimed today.

In an upbeat assessment, the Irish Business and Employers Confederation (Ibec) said the recession will end next year.

But they insisted painful cutbacks – particularly to wages – are still needed to drive the cost of living down and allow Ireland to compete with other countries again.

Apart from that, Fergal O’Brien, Ibec’s senior economist, said the economic forecast for next year and 2011 was better than expected.

“The world economy is pulling out of the worst recession since the Second World War,” he said.

“This is great news for an open economy such as Ireland – indeed, our worst fears may turn out to have been just a little overcooked.”

Mr O’Brien predicted the downturn would not be as bad as expected next year and joblessness would not get any higher than 14%.

“The economy will pull out of recession during 2010 and return to annual growth in 2011,” he added.

He insisted continued high costs in Ireland were making it very difficult for companies to sell on goods and services abroad.

Much-needed improvements to the sale of exports required “painful” corrective action, he warned.

“Ireland has no option but to cut our cost and wage levels closer to those of our trading partners,” he said.

Ibec represents small, medium and large businesses which employ more than 70% of the country’s private sector workforce.