Economist Jim Power is forecasting full year GDP growth of 4.8% for 2017. In his Friends First outlook for 2018, he anticipates that real GDP could expand by 4% next year, ahead of the Government's GDP forecast of 3.5%. The Friends First outlook notes that as we move towards the end of the year, the momentum in the Irish economy is strong and prospects are boosted by strong tail winds from global economic improvements.
However, the uncertainty created by external factors such as Brexit negotiations, as well as global corporation tax developments, present potential challenges to the Irish economy over the next 12 months. "I'm not encouraged by the level of uncertainty around Brexit. The notion that you would have similar regulatory regimes in the EU and the UK defeats the purpose of the vote to leave. It would be a great outcome for us, but politically I don't see how it could be sold," Jim Power said. "The big issue is what kind of trading arrangement we will have with the UK at the end of this," he added.
On the corporate tax front, Jim Power said we were attracting a lot of unwanted attention internationally and at a time when we are losing a key ally in Europe. "We see the changes in the US to attract multinationals back home. That will likely have a minimal impact on Ireland. The bigger issue is the corporate tax agenda in Europe. The regime is under serious scrutiny. One of the problems is that, with Britain about to exit, we become more exposed and vulnerable. This will require strong leadership," he stated.
According to the economist, the big issues for the Irish economy in the coming years will be demographics and ageing populations. "The question is where the money to fund older people comes from. The behaviour of the corporate sector in terms of taxes paid will become a big focus," he explained.
On the domestic front, housing supply is identified as the biggest issue facing the economy. Jim Power said that official policy is not helping the situation. "Introducing demand side measures like the help to buy scheme was a mistake. On the supply side, we don't have the capacity to deliver the level of housing required. It's a very difficult tap to turn on. If you turn it on too much, you overheat the economy and create the situation we had a decade ago. The situation is probably going to get worse before it gets better," he concluded.
MORNING BRIEFS - EU finance ministers have adopted the first blacklist of tax havens which includes 17 mostly small countries - mainly in the Americas, Africa and the Middle East. These 'havens' are said to have colluded in tax avoidance and refused to commit to tax transparency. The process only considered non-EU countries but Oxfam believes that if the criteria were applied here, Ireland, Malta, Luxembourg and the Netherlands would also make the list.
*** Dublin based United Oil and gas - which is listed in London - is celebrating success at their first well. The well in the Po Valley in northern Italy yielded a substantial reservoir of gas. United and its partners are proceeding to complete the well and install production equipment.
*** Bitcoin has passed the $12,000 mark for the first time. The cryptocurrency value is up again on speculation that digital currencies may soon be considered a legitimate asset class for mainstream investors.
*** FTSE 100 listed property property group Hammerson has agreed to buy UK based Intu Properties in a deal valuing the smaller rival at about £3.4 billion. The merger, it is understood, will create a £21 billion pan-European portfolio of retail and leisure properties. Hammerson is owner or part owner of a number of shopping centres here including Dundrum Town Centre, the Ilac Centre and the Pavillions in Swords.