Ireland to have second-highest growth in EU wealth by 2010

IRELAND will have the second-highest growth in wealth in the EU by 2010, with major growth coming from the country’s poorest region as it catches up with the wealthier south and east.

According to a report on Europe's economic future, Ireland will see GDP growth of 9% in the 10 years from 2000 to 2010, second only to Sweden with a forecasted growth of 15%.

The report, to be released in the next few days, says a major contributor to this will be the performance by the Border, Midland and Western (BMW) region, where GDP will grow by a massive 25%.

The region will then be wealthier than the European average, with an index of 105 from its present rating of just under 83, which puts it among the poorest of Europe's regions.

It forecasts the south and east will grow also but by a much more modest 6%, bringing it from a rating of 125, or 25% wealthier than the EU average, to 131. The author of the report, Dr Robert Huggins, said this closing of the gap between the country's two regions is due to prudent investment in the BMW region.

"The main boost to Ireland's growth will come from the performance of the BMW region, where the investment of recent years will have a massive effect," he said.

The growth generally is a result of the investment from structural funds by the EU and the country's success in attracting high growth industry such as technology and bio-tech, mainly through tax incentives and holidays.

"This major growth and the closing of the gap between the regions comes from a serendipitous mix of your use of structural funds, tax incentives and the crucial mix of knowledge-based industry," Mr Huggins said.

However, he warned that the Government will have to be careful that the economy does not overheat leading to serious inflation, which has been obvious over the past few years.

The catching up between Ireland's two regions is going against the trend in most of the rest of the EU.

Dr Huggins' report says there is a growing gap between the richer and poorer regions as those at the bottom end lose competitiveness and the richer becomes wealthier.

He warns Europe should not follow the US model in striving to become the world's most successful knowledge-based economy. "The US is based on major multinational companies while the EU knowledge-based enterprises are based on small and medium-sized companies. SMEs must be targeted and more must be spent on research and development and on education."

Dr Huggins heads a leading European economic think-tank and consultancy specialising in competitiveness research and is founder of the influential World Knowledge Competitiveness.

The European Futures report which is to be launched at the World Future 2003 Conference in San Francisco finds that between 1994 and 2000 the prosperity gap within Europe's nations increased by a staggering 25% with Finland, Britain and the Netherlands suffering most.