Central Bank rules out jobs upturn before 2011

ANOTHER year of gloom on the jobs front is expected after the Central Bank said no improvement was likely before late 2011.

The forecast comes as prices creep upwards for the second month in succession and as three more lenders announce increases in mortgage interest rates.

The Central Bank says unemployment will average 13.7% this year — the highest for 16 years. There is a prospect of a slight turnaround in the second half of next year but unemployment in 2011 is still expected to average 13.2%.

Part of the problem is that people aren’t spending money on goods and services, mainly because they’ve lost jobs, suffered income cuts or are saving every spare cent for fear of what lies ahead.

That won’t be helped by the latest inflation figures, which show prices rose last month after also rising in February.

Although the increases were modest, 0.4% in February and 0.1% last month, they reversed the trend for successive price falls that began in October 2008.

Of most concern were the increases in fuel prices. Petrol went up 2.8%, diesel by 2.4% and home heating oil by 4.8%.

Fine Gael and the Irish Small and Medium Enterprises Association (ISME) said they feared the increased costs would further hit struggling businesses and called on the Government to act. ISME chief executive Mark Fielding said: “Increased state-influenced costs continue to undermine our competitiveness, which is crucial to any upswing in the economy.”

The inflation figures have not factored in recent mortgage interest rate increases which will further hit consumer spending power. Bank of Ireland, ICS Building Society and EBS yesterday announced they were upping rates by 0.5%-0.6%, following previous hikes by Permanent TSB and AIB.