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Dublin: 8 °C Monday 24 November, 2014

Europe predicts growth and less unemployment for Ireland

The European Commission predicted 1.4 per cent growth for 2014 and employment growth of 2.4 per cent.

Image: Growth via Shutterstock

THE EUROPEAN COMMISSION believes Ireland will grow its economy by 1.7 per cent this year, and by a further 3 per cent in 2015.

Europe is also upbeat on the country improving its employment levels by 2.4 per cent in 2014, and by the same amount next year.

In its Spring Forecast, the Commission has estimated that Ireland’s unemployment levels will descend to 11.4 per cent this year and experience another drop to 10.2 per cent in 2015.

During the so-called Celtic Tiger years, Ireland’s unemployment rate did not rise above 4.9.

Unemployment was estimated at 11.8 per cent in March 2014, bringing it in line with the euro-area average for the first time since October 2008.

Despite the cheery tone in most of the forecast, there were warnings about credit supply to SMEs and legacy debts.

“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.

“Impaired credit channels are also a risk to the construction sector, which, if not addressed, may lead to bottlenecks in the supply of new residential and commercial
property.”

The successful resolution of nonperforming loans is a precondition for the restoration of credit channels and for sustaining the economic recovery beyond the short term.

There are also external risks at play, according to the Commission, including uncertainty about exports because of the country’s “openness and dependence on international trade”.

Any possible rise in energy prices related to political tensions was also mentioned as a risk because 85 per cent of the country’s energy needs is met with imports.

Meanwhile, it said the government debt peaked at 124 per cent of GDP at the end of 2013.

Separately, the NTMA confirmed another bond auction to take place this Thursday morning.

The agency will continue its funding programme with a €750 million sale of 10-year Treasury Bonds.

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