Recovery to create 50,000 jobs this year: Ibec

Fifty thousand jobs will be created this year, consumers are spending again, and growth will be stronger than expected, according to an upbeat analysis of the economy by Ibec.

In its first quarterly report for 2014, the business group said that despite disappointing figures in 2013, there were very encouraging signs that the recovery is gaining momentum.

Ibec has revised up its 2014 GDP growth projection to 2.9%, and said investment in the economy will increase by 21.5% — its previous projection was 15.5%. Consumer spending will increase 1.9% this year. It also predicted another good year for jobs, with 50,000 to be created and unemployment dropping to 10.9% this year and to 9.6% in 2015.

Ibec said poor 2013 GDP figures do not reflect the true strength of the economy due to the disproportionate impact of the pharmaceutical patent cliff, where major drugs came off patent and which wiped almost €5bn off the value of Irish exports.

Fergal O’Brien, Ibec’s head of policy and chief economist, said: “The recovery is gaining momentum, with spectacular employment growth in the private sector and strong increases in consumer confidence, business confidence, and investment.

“Ireland is on the way back. We are now out-performing many of our European competitors. This strong performance means the minister for finance will be in a position to reduce income tax in the next budget. The 2013 GDP performance was not a true reflection of the current health of the economy — the economy has been performing much better than reflected by the GDP numbers for some time now.

“The employment growth trend actually provides a much better measure of what is happening in the real economy at present.”

However, he said threats to competitiveness, particularly wage pressures, and a fragile European recovery remain a concern.

Ibec said the key priorities for the next phase of the recovery are: reducing the tax burden; better government policy; further investment; extending Ireland’s global reach; and promoting enterprise.

CSO figures show the number of people on the live register has dropped below 400,000 for the first time since the collapse of the economy in 2009. The seasonally adjusted live register fell by 2,500 in February to 398,300 — the lowest total since May 2009.

This represents an annual decline of 30,807, or 7.2%. It was also the 20th month in a row where a decrease in the number of jobless people has been recorded.

Commenting on the economy, Taoiseach Enda Kenny said private and public debt was still huge but that banks would pass stress tests this year.

Ahead of President Michael D Higgins visit to Britain this week, Mr Kenny emphasised the economic ties between the two countries.

In an interview with the Andrew Marr Show on BBC, he said: “Ireland got into a catastrophic economic situation. Britain was the first country to offer assistance in terms of financial loans.

“We were the first country to exit the bailout programme last December. We’re back in the bond markets, the interest rate is down from 15% to just less than 3% on 10-year money last week, so we’re recovered in that sense.

“Yes the public debt is too high, yes private debt is too high, but we had a primary surplus in last year’s budget. We’re happy that our banks are sufficiently well-capitalised to deal with any elements of those stress tests.”

However, Isme chief Mark Fielding criticised the Government and said while there had been a “modest” improvement in job figures the continuing creep of business costs and the lack of adequate bank credit were of concern.