IRELAND’S ECONOMIC OUTLOOK “remains clouded by uncertainty”, according to the European Commission’s summer economic forecast. 

The report points to the UK’s withdrawal from the EU, and the knock-on effect this will have on exports and taxation, as a reason for the uncertainty. 

In the first quarter of 2019, unemployment fell to 5%, a feat last seen in 2007 during the Celtic Tiger, while employment was up 3.7% year-on-year. 

Average weekly earnings rose by 3.4%, according to the report, in line with last month’s CSO figures which said there was a 3.3% increase in average wages compared to 2018.

GDP is forecast to grow by 4% in 2018 and by 3.4% in 2020, while inflation – the price consumers pay for goods and services – is forecast to rise to 1.1% this year, and to 1.3% in 2020.

However, positive forecasts for Ireland’s economy on the back of the gains made recently have been thrown into doubt as the latest Brexit date of 31 October draws nearer. 

“The economic outlook remains clouded by uncertainty, particularly relating to the terms of the UK’s withdrawal from the EU and changes in the international taxation environment,” the report said. 

“More generally, the difficult-to-predict activities of multinationals could drive headline growth in either direction. In the absence of major negative external shocks, the risk of overheating could increase in the near term.”

Both Boris Johnson and Jeremy Hunt, who are competing for the role of Conservative leader to become British prime minister, have said they won’t rule out leaving Europe without a deal in October. 

Production

Meanwhile, the decline in industrial production towards the end of 2018 was reversed at the beginning of 2019. Construction output increased by 5.9% in the first quarter of 2019, and new dwelling completions accelerated to 23.2%. 

“Domestic activity is projected to continue growing at a solid pace with robust private consumption growth underpinned by strong growth in employment and wages.

GDP will slow down, however, “on the back of less favourable prospects in key export markets, increasing capacity constraints and a slowdown in government expenditure”.

As a whole, the EU has experienced marginal economic growth, but this is forecast to fall from a rate of 1.9% in 2018 to 1.2 in 2019.

Last week, NTMA chief Conor O’Kelly told the Oireachtas Public Accounts Committee that Ireland has a 100% chance of entering a recession because of the “mountain of debt” it has to repay.