Economic recovery - Too early to celebrate

The news that the economy is on target to grow further this year and next and that unemployment will fall below the EU average is to be welcomed, yet caution must still be exercised.

The European Commission forecasts growth of 1.7% for Ireland this year and a further 3% in 2015. Its spring forecast is also optimistic about improvements on the jobs front, estimating that unemployment levels will fall to 11.4% this year and to 10.2% in 2015.

However, the commission issued a note of caution on credit supply and legacy debt. “Impaired access to finance and the effects of legacy debts continue to pose risks for SMEs seeking to replenish capital stocks and seize new business opportunities,” the report said.

It also points to external risks to exports and our vulnerability to international energy prices. Still too early to break out the champagne, then.