Economy Strong growth at end 2003
The national accounts figures show the rate of expansion was 5% by the end of the year. The data also shows, however, that multinational companies took about €23bn out of the economy.
Separately, the Economic and Social Research Institute has warned that a general round of wage increases of about 2.8% is all that can be afforded by the economy next year.
In its latest economic commentary, the ESRI said that increases above that level would damage our competitiveness.
The ESRI said that the current national wage negotiations must take account of the lower productivity growth in Irish-owned companies.
However, the Institute said our public finances are in relatively good shape and there is scope for the Government to ease the tax burden on average industrial workers.
The ESRI thinks economic activity here will pick up a little this year and next, but that the pace of this pick up will be below what our economy is capable of.
The result will be an extra 23,000 jobs this year, followed by about 28,000 next year.
The Institute says this will not be enough to stop unemployment rising, but that the rate of unemployment will remain low by international standards at 5% or lower.
They are expecting moderate pay increases reflecting lower inflation as well as modest increases in the productivity of workers.
Inflation will average 1.8% this year and 2% next year according to the report.
Govt borrowing to be €600m less
The ESRI expects wage increases of the order of 2.8% will result from the national wage negotiations that both started and stalled just two days ago.
Danny McCoy of the ESRI said any wage increases above 2.8% will have no reality in the market place.
Mr McCoy said high cost levels in Ireland are undermining our competitiveness and enlargement of the EU in May will be a catalyst for a greater focus on wage costs throughout the European Union.
However, the ESRI said our public finances are sound and that government borrowing this will be €600m less than expected.
This means the Government is in a position to take average workers out of the top tax bracket as part of the national wage deal.
