Ulster Bank: Economy to grow 3.1%

The economy will grow by 3.1% this year, supported by a recovery in domestic consumption and investment, as well as buoyant exports, according to Ulster Bank.

Its chief economist, Simon Barry, has upgraded his growth forecast from 2% to 3.1% for 2014. Moreover, he has pencilled in a budget deficit of 4% at the end of this year on the back of better-than-expected economic data. Consequently, the Government will be able to reach the 3% fiscal deficit agreed with the troika by the end of 2015 by implementing budget cuts of far less than the planned €2bn, he said.

The unemployment rate is forecast to drop to 11.5% by the end of this year and 10.4% next year following a 2% increase in employment. Mr Barry expects nationwide house prices to rise by 10.5% this year and 8% next year. From a record low of just over 8,000 new houses built in 2013, this is expected to increase to 11,000 this year and 13,000 next year.