European Commission growth prediction for Ireland shows Government's approach to development is not working

European Commission growth prediction for Ireland shows Government’s approach to development is not working
The European Commission today published its Winter 2011 Review of Economic Adjustmen Pprogramme for Ireland. The Review has revised down Ireland’s growth rate for 2012 to 0.5% as a result of falling domestic demand and the growth slowdown in Ireland’s main trading partners, especially in the Euro area where there is a danger of some of these countries sliding into recession. Projections for domestic demand show there will be no real improvement until 2014. The report also highlights some of the risks to Ireland’s growth noting that a further drop in Irish exports will impact on budget performance and on Ireland’s overall growth. 

Government is running down the economy by focusing principally on cutting expenditure and refusing to develop an investment programme of sufficient scale to have a substantial impact on employment. Consequently, Ireland is facing a lengthy period of low-growth, high debt, increasing poverty, high unemployment and growing inequality. At the same time the austerity drive to balance the nation’s books is creating a society with deep social injustices, not least for young people who have no sustainable jobs and no future in Ireland.

The report highlights the negative impact that a slowdown in demand for Ireland’s exports and any further reduction in domestic demand would have, pointing out that if there is a further deterioration of the macroeconomic situation the government may have to resort to ‘additional fiscal tightening’ later in the year. 

The growth rate that underpins the Government’s current economic outlook is heavily dependent on growing exports. However the latest CSO figures show a drop in value in Irish exports of 9% in December 2012 and the European Commission Report highlights the dangers of relying solely on exports and not implementing measures to boost domestic demand and address unemployment. 

The Document can be downloaded below