National Development Plan must develop the regions, says ESRI

The National Development Plan should stay focused on developing regions and cities outside Dublin as a policy response to offset economic divergence, a leading ESRI economist has said.

Kieran McQuinn said that there was significant pickup in economic activity in cities such as Cork but there appeared to be issues around providing public infrastructure in the region. Noting calls for the fast-tracking of projects such as the Dunkettle interchange and the M28, he said it seemed public infrastructure was struggling to keep up with increases in private investment.

He was speaking as the think-tank unveiled its new analysis that showed house prices and rents had diverged significantly between counties since 2011, signifying already wealthy areas were growing faster.

And the ESRI warned that a relatively small falloff in windfall corporation tax receipts would deliver an outsized and longstanding hit to government finances.

In its latest quarterly report, the ESRI said even a moderate fall of €2bn in annual revenues from the corporation tax source would lead to a slowdown in economic growth, a rise in government debt levels, and increased costs of borrowing for the State for many years.

The National Competitiveness Council says that it is imperative the Government address the costs facing small businesses, specifically the cost of credit, legal costs and insurance costs.

“As a small, highly open and concentrated economy, we are particularly vulnerable to external shocks, as we saw clearly in 2008,” said council chair Frances Ruane. “Consequently, we cannot afford to be complacent about our strong overall performance.”