The social partners have been warned that any new national wage agreement must not be driven by expectations on the exceptional growth of the past but rather be based on the likelihood of a reduction in growth levels in the future. The warning came this afternoon from the Central Bank in its latest commentary on the economy. The Bank also warns there is abundant evidence of overheating in the economy. The Bank believes there are four key areas in which this is apparent. These are labour shortages, wage pressures, continuing house price increases and infrastructural investment.

On the question of wage pressures the Bank, in a thinly disguised message to the trade unions, warns that any increases agreed must be based on expected growth rates in the future and not on the exceptional rates of the past number of years. It also adds there is the possibility of a slowdown in foreign direct investment, which has been a major driving force behind the recent strong growth phase. Commenting on the budget surplus, which is set this year to be in excess of £5 billion, the Bank says this is no excuse for losening fiscal policy. Regarding further investment in infrastructure, the Central Bank asks if it is now time to consider more explicit charges for users of facilities in the transportation and utilities areas.