ESRI report - Reliance on one industry is a danger

While short-term economic indicators look promising for the remainder of this year and next year, the Economic and Social Research Institute (ESRI) has warned that the latest figures published by the Central Statistics Office (CSO) indicate that declining productivity and an over-dependence on the construction industry could threaten further economic growth from 2008.

Some two-thirds of the construction industry is involved in building dwellings. Last year 86,000 dwellings were completed and a further 75,000 to 80,000 will be completed in 2006. This is the highest rate of dwelling construction in Europe, and more than twice the current rate in Britain.

It is important that the country should not become too economically dependent on one sector. With the provision of so many new dwellings, demand is likely to decrease and this slowdown could have knock-on implications. Pure economics indicate that house prices are likely to stabilise with the sheer volume of supply.