Public pay demands amounting to €1.6bn could be more disruptive to the economy than the immediate effects of Brexit, a major consultancy firm has warned.
DKM Economic Consultants said that “just as clouds appear on the horizon, public sector unions are readying for a major barbecue feast”.
The group’s chairman, Brendan Dowling, urged caution over the potential fallout of Brexit, as public pay demands are “building up to unrealistic levels” while the Government is “without the capacity to take difficult decisions”.
The challenges, according to Mr Dowling, include the loss of business to food firms from the slump in the value of sterling and shortages pushing up the costs of buying and renting homes.
He said the Public Service Executive Union is seeking pay increases of around €1.6bn, “double the approved pay rises under the current Lansdowne Road agreement”.
The DKM bulletin shows that nonetheless all major forecasters of the economy project that GDP will expand at healthy rates.
The economy will grow 3.8% this year and 3.2% in 2018, according to an average of 14 forecasters, including the IMF, OECD, as well as the Department of Finance, the Central Bank, and the ESRI.
However, DKM said there is a feeling that “exceptional” rates of economic growth could not last.
A UK economy boosted by the weakness of sterling is “relatively unattractive to Ireland”, it said.
Separately, Chartered Accountants Ireland said its survey of businesses shows they fear customs tariffs most under a hard Brexit.
Some companies in the food industry fear that delays in getting goods through customs could potentially “eliminate cross-border trade between the North and the south”, said its director of public policy and taxation, Brian Keegan.
Meanwhile, another survey of 1,045 SMEs, which was commissioned by Jobs Minister Mary Mitchell O’Connor, urged SMEs to prepare for the potential effects of Brexit down the road.
The survey found almost 65% of small businesses reported little or no fallout from Brexit so far, but that most expect to be hit in the next 18 months. Food exporters were among companies that had been hit the hardest.
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