The road to recovery will be a long one and a more voter-friendly budget will not be on the horizon for a number of years, according to the EY Economic Eye Winter Forecast for Ireland.
The forecast for growth both this year and next is substantially upgraded from 2.4% to 4.8% for 2014 and from 2% to 3.3% for 2015. But EY says that with elevated debt, investment levels in the economy are well below historic norms and severe constraints on future public spending will mean that the recovery will be a slow one.
The report's author Professor Neil Gibson says that while it is great to see Ireland back on the top of economic growth charts again, the growth comes after six very, very difficult years for the country and the country still has a long journey to continue with many businesses and consumers yet to fell any real sense of recovery. But the Professor adds that the country's balance level of growth is encouraging for the months ahead.
While recent months has seen the end of fiscal austerity in Ireland, Professor Gibson says that due to the country's high debt levels and EU rules, the Government will not be able to throw any significant amount of money into the economy. He also notes that while the Republic of Ireland is heading out of austerity, the Northern Ireland economy is actually heading into its most challenging period for some time. He says it will be interesting to see if the North can learn anything from what happened south of the border in recent years.
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MORNING BRIEFS - Activity and employment levels in the construction sector continued to increase in November, the latest Ulster Bank construction purchasing managers index shows. The index, a measure of both activity levels and sentiment in construction, has now risen for 15 months in a row. Commercial and house-building are the two strongest segments. Sentiment levels in the sector are the highest they have been since Ulster Bank began the monthly index in 2000. Three quarters of construction firms expect business to improve over the coming year.
*** Energy prices as measured by the Bord Gáis Energy Index are at their lowest level in four years. The price of crude oil, which is the biggest influence on the index, fell by 18% during the month and is now 30% lower than it was this time last year. That covered increases in other components of the index. Wholesale natural gas prices, for example, rose by 5% during the month because of colder temperatures and consequent higher demand in the UK.
