The Economics and Social Research Institute (ESRI) has warned that high numbers of job losses experienced in recent weeks will continue over the next 18 months.
The economic think tank’s medium term review of the Irish economy, published every two years, predicts unemployment will peak at 6% next year, with the traditional manufacturing sector likely to be most hit by the economic slowdown.
In its report the ESRI says that inappropriate tax and spending policies by the Government over the last two years have not helped the economy, but the primary reason for our current difficulties is the sluggish international and particularly European economy.
In that context it says the Government can only provide ‘limited insulation’ against ‘economic tribulations’.
On a more positive note, the ESRI expects improved economic circumstances in 2005, with growth averaging 5% until 2010.
The lead author of the report, Professor John Fitzgerald, said there was no scope for further tax cuts from the Government in the short term. But from 2005, and with two years to go before a general election must be called, the public finances should have improved to the extent that spending on public services can increase or taxes can be cut.
This relatively upbeat outlook does assume, however, that the international economy picks up in 2005, and in the mean time we address the price and wage increases undermining Irish competitiveness.
