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THE CENTRAL BANK has upped its growth and job forecasts stretching until the end of next year – but it continues to pour cold water on calls to use Ireland’s economic windfalls to cut taxes.
In its quarterly bulletin out this morning, it forecast the Irish economy would grow 4.5% this year and 3.4% in 2015 – figures likely to put more pressure on the government to loosen its tax grip at the upcoming budget.
The GDP estimates were up from the Central Bank’s figures from only three months ago, when it forecast growth of 2.5% in 2014 and 3.3% the following year.
Speaking at the Friends of Fine Gael dinner in London today, the Taoiseach Enda Kenny mentioned the news, saying:
“The latest growth figures, including from the Central Bank today, point to an economy that is in recovery. It is clear that our plan is working and the country is now moving in the right direction. We are now in a situation where Ireland has one of the fastest growing economies in Europe.”
He said that the upcoming Budget will be “another stepping stone in our plan to fix the national finances and promote jobs and investment”.
Today it also predicted the official unemployment rate would slide to 11.3% this year and drop to 10.3% at the end of 2015 – down from its last forecast of a 10.5% jobless rate.
The Central Bank predicted exports, imports and personal consumption would all be up on previous forecasts, with only public expenditure continuing to shrink over the next 14 months.
Don’t get too excited, they are bankers after all
In its statement, the bank said Ireland’s economic recovery had “gained momentum and is broadening” – but its was less buoyant than suggested in recent national accounts figures.
“While the latest year-on-year headline growth rate overstates the scale of the improvement in economic performance, the evidence from a range of other data indicates that the recovery has strengthened and is becoming more balanced,” it said.
Encouragingly, the domestic economic recovery has become more broad-based, supported by gradually improving employment and incomes.
“Against this background, consumer spending is growing and, allied to strong growth in investment spending, domestic demand is set to contribute positively to growth in 2014, for the first time since the downturn.”
Pay off debts, don’t cut tax
The improving economic outlook has driven increasingly-vocal calls for the government to cut taxes in the upcoming budget after years of austerity-inspired policies.
Health Minister Leo Varadkar seemingly let the cat out of the bag when he told taxpayers could expect “an extra fiver or tenner in your payslip every week”.
But in its bulletin, the Central Bank said although tax revenues were ahead of target and GDP forecasts were up, the government should use the windfalls to pay off debts and cut its deficit.
“This first post-(Troika) programme budget offers the opportunity to further solidify Ireland’s reputation for creditworthiness; it is important that this opportunity is taken,” it said.
“Beyond 2015, it is imperative to facilitate the return of the economy to lower and safer levels of public debt. Securing debt sustainability through a sequence of primary surpluses is necessary to underpin a more durable recovery.”
- Updated 8.30pm. Additional reporting Aoife Barry
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While we are actually having normal growth at last, though it will take time to feed through.
The rest of Europe is sinking further in to the hole.
Trading with non-Eu countries should become a national priority. We need to put space between ourselves and the Euro titanic.
Look at the growth figures coming out of Europe. It is standing still.
We have to be ready for some major upheavals in the next decade in Europe.
But Seanie,
Surely you realise that Europe is a mirror image of the cycle of both US and UK. We’re probably less than 12 months from full blown EU QE. With a lag of 18 months europe will be back in substantial Growth . Now is the wrong time to for a country like Ireland to Disengage with EU trade
Agree totally with Seanie.
The little stimulus that Draghi announced is already coming under major attack from German conservatives.
Full blown QE is not going to happen
Italy in the next 12 months is going to go over 140% to GDP, as it lives in the no growth zone and debt piles up.
I strongly disagree that Europe is a mirror image of those 2. They, for right or wrong dealt with the problem and have reduced unemployment sharply and have at least grown.
Europe has had 7 years of decline and that it will take a generation to over come. Things like that become entrenched.
@ Seanie,
Full Blown QE within the next 12 Months. The conditioning of the Germans and the Nordics has been underway for 12 Months now and their stance is softening. Growth and reduction in unemployment in both the US and UK is a direct result of QE. Would have happened sooner here but for the political mess that is the EU. & years of decline is a direct result of inaction by EU leaders with only 2 outcomes QE or break up of the EU. QE is the least unpallatable
The Eu experiment is getting close to breaking point.We need to make plans to leave it asap. If we stay it will all end in tears
Good news, though our unemployment rate is way too high and jobs are not being created fast enough. To have an unemployment rate still over 10% by the end of next year is just not good enough. There is a huge housing crisis in Dublin at the moment, and the government are doing nothing whatsoever to alleviate it. Surely the government can be more active on this front, with the double whammy of helping tackle the housing crisis and reducing unemployment through new construction jobs.
And we should also note that ‘official registry’ figures tell only half the story… according to economist Constantin Gurdgiev on his blog (whose number crunching is generally very reliable) the +real+ shortage of jobs is acutually OVER 20%
Even if the figures come down by 1% point per year it’ll be another 15 years before it’s down to 5% ‘real’ unemployment.
These f&*^s call this a ‘recovery??
Do you have a link to Gurdgiev’s article Mike? I agree, generally, regarding the reliability of his analysis.
Finfacts have also demolished official stats regarding the “recovery”.
The idiot/ eejit’s guide to distorted Irish national economic data
By Michael Hennigan, Finfacts
Sep 5, 2014
http://www.finfacts.ie/irishfinancenews/article_1028148.shtml
Sean,
It’s in one of his recent commentaries on the recent Irish Economy stats here: (don’t have the exact link, sorry)
http://trueeconomics.blogspot.com/
He also wrote a piece a little further back where calculated real unemployment including emigration data at near 30%.
Thanks for the link..why does everyone ,apart from bellenda and co..know that people have no income or very little income to spend in the local economy
Therell be f all in the budget. The big sweet vote buyer will come next year. If they make it that far
Of course the outlook cant be all sunshine and roses , the central bank unlike most journalists reporting on it and the politicians spinning it know how financial structure works and know to well we have surpassed any sustainable level of wealth by debt , once the forward only momentum in borrowing that the euro requires became stagnant , there is no realistic way to kick start it again . For those who do not know we continue to borrow money to pay of previous loans and more importantly loan interest, loan interest does not exist as currency it has to be created by further borrowing , we have Long surpassed any reasonable sustainability and we we have to Default on our loans its impossible not to and that goes for every nation in the eurozone . We are basically borrowing now to dely what mathematically is inevitable and unavoidable . Until we actually default here and in other euro states there really cannot be any true recovery
A littlr knowledge is a dangerous thing. The world is not a bed of rose but we are not all doomed
“What do you mean, my €20 note is only worth the value of paper it’s printed on” says nearly everyone…
Can you believe it! BANKERS telling us how to run our country!!! Give me a f***ing break!
Interesting logic.
Some people who were bankers did significant damage to the country’s economy; therefore you will not trust anyone in their profession again.
Let’s hope you never get a misdiagnosis from a doctor..
@conor McGuire your €20 euro note is worth the value that the E.C.B sets with various methods most notable being inflation. However for that €20 euro note to come into existence it at some stage had to be borrowed from a central bank who print and control currency as you know . That €20 did not come into circulation without it being borrowed by an institution , government etc etc , and with borrowing as expected there is interest on that 20 euro after it is Initially borrowed . The only way that interest can be repaid is through further borrowing which creates a spiral effect as the borrowing to repay the interest also contains interest that cannot exist without being borrowed into circulation. Under the Punt our central bank controlled the currency and we / they could and did offset the interest by balancing it the level of inflation . The only other way to offset the non existent Interest is to bring money into circulation that has no interest or to introduce it from somewhere else , now of course the first is not going to happen so exports introduce money to an economy that is not borrowed and under our previous currency or within the UK currently money made from exports offsets the debt in circulation . Within the euro as people screamed about for 10 years before it was introduced we need every nation to sustain exports outside the EU as EU trade within the eurozone does not offset any debt created in the ECB those exports we need have to operate within no less than 10 percent of the total debt creation and it has to be uniform and it simply has not been . So therefore unless we default in the eurozone and I’m talking about Interest default not the loan default we cannot continue on the path we are on . That €20 cannot magically become €20 and the value of its Initial interest .
@alan there is nothing doom and gloom about an interest debt default is unavoidable and completely natural under this currency we have. It would of course be a disaster for Ireland to default on its own while the rest of Europe continues to borrow to repay Interest , I’m saying to fix the financial mess we are in a eurozone default needs to happen , it is going to happen and it will happen in our lifetime delaying it really is pointless and within a very short period of time we will all be much better off .
Out economy is in recovery, it must be – priced a 1 bed apartment in new development on the Clontarf Rd – €300,000+ … Here we go again déjà vous
Here a video I just found that kind of explains things its not entirely accurate buts its close enough http://m.youtube.com/watch?v=Kz6xG2YtyyE
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