Ibec has significantly upped its forecast for Ireland’s economic growth in 2014, saying the bailout exit should usher in a phase of strong economic growth and job creation.
In its latest economic outlook the employers’ representative has upped its forecast for GDP growth in 2014 from 2.3% to 2.8%. This, it said, could lead to the creation of around 50,000 jobs during the year.
“The bailout exit is very significant and will further bolster consumer and business confidence. The prospects for 2014 are good and the recovery will gain further momentum next year,” according to Fergal O’Brien, chief economist and head of policy at Ibec.
“Growth should accelerate to nearly 3% and this will lead to about 50,000 new jobs. The GDP growth estimate for 2013, of under 1%, is not a true reflection of real economic activity; the 2.5% employment growth this year is a much more accurate indicator of the current health of the economy.”
Ibec’s latest update also predicts a 15.5% increase in investment in the economy (up from a previous estimate of 9.7% growth) and a 1.3% rise in consumer spending. The body had previously predicted a 1% rise in the latter.
Despite Ibec’s confident air, it warned that challenges to Ireland’s recovery would remain in the post-bailout period, with “much more reform” needed to protect the public finances and to lower the public sector pensions liability.
Ibec said income tax levels remain too high, with both rates and bands needing to be reduced in next year’s budget. Having one of the highest marginal tax rates of any OECD member acts as a disincentive to work and job creation, the organisation said.
It said the Government is not investing enough into infrastructure and should be aiming to spend 4% of GDP per year on capital expenditure by 2020.
It called for more urgency on the delivery of the Pathways to Work programme, which is aimed at getting people back to work.
“We need a sustainable funding model for third-level education and we must deliver a flexible, employer-led apprenticeship model,” the latest commentary said.
“The troika have gone, but we must not abandon vital reforms. We need to reduce the burden of regulation on business and radically reform local government to make it more efficient.”
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