New public sector pay deal may embed Celtic Tiger level of inflation into economy, expert says

Rossa White, chief economist at EY Ireland, said: 'The risk is that pay deals above inflation risk keeping it there — like the mid-2000s.'

A new public sector pay deal is likely to overshoot market inflation and could see Celtic Tiger rates of inflation become embedded in the Irish economy, an expert has warned.

The proposed deal, agreed in the early hours of Wednesday morning between trade unions and the Government, would see a phased 10.75% pay rise for public sector workers over the next 33 months.