50,000 will find a job as economic growth surges
Published 07/08/2014 | 02:30
Tens of thousands of people are set to be lifted off the dole queues next year as the economic recovery gathers pace.
The numbers at work will jump by 52,000 next year, with unemployment dropping below 10pc for the first time in six years.
The Economic and Social Research Institute (ESRI) has also predicted the economy will grow 3pc this year – much faster than the 2.1pc estimate from the Department of Finance.
Last night Tanaiste Joan Burton said that it was “quite possible” that the Government could hike its growth rate ahead of the Budget.
If its forecasts pan out, the ESRI said the Government could get away with imposing possibly less than €1bn in tax hikes and spending cuts in October’s Budget.
The prospect of an easier Budget was also raised by Ms Burton, who said that the era of severe tax hikes and spending cuts had ended.
“I said quite early on that it wouldn’t be necessary to have the kind of cuts that were the feature of the ‘Troika years’ budgets,” the Labour leader said.
“We have now emerged from that period and are coming into a growth period.
“We of course have to be extremely careful to manage it properly but also have to be conscious that we have a
growth that people can actually feel.”
The ERSI report and the Tanaiste’s comments come on the back of tax figures which show the state’s finances are more than €500m ahead of target.
ERSI economist David Duffy said the domestic economy was starting to make a contribution to the recovery.
“We’re starting to see more balance emerging in the growth,” he said.
“Sentiment is picking up on the back of a more positive economic outlook and people having a more positive perception of the labour market.”
The last time the unemployment rate was below 10pc was in 2009, when it hit 9.5pc.
The number of people on the Live Register last month fell to almost 383,000.
In its summer economic commentary, the Economic and Social Research Institute (ESRI) said the unemployment rate was steadily showing signs of moving towards European averages. And it said emigration would fall between this year and next year because of the forecast growth in employment rates.
The number of people out of work will fall from an estimated 249,000 at the end of this year to 215,000 in 2015, the think-tank said. It urged the Government to continue to plan for the €2bn adjustment in the Budget, but said that if its forecasts panned out, that could be reduced to €1bn or less.
Ms Burton also said it would be a "win-win" for Ireland and Europe if it could use cheap market funding to repay its expensive International Monetary Fund (IMF) loans early.
Currently, early repayment of the IMF loans would automatically trigger repayment of the less onerous EU portion.
"All of these are delicate negotiating matters, but in terms of countries like Ireland recovering - which would also be an achievement for Europe - I think this is a win-win, a win for Ireland and a win for Europe," she said.
"This particular deal would save Ireland €200m a year.
"In the scheme of things, that may not sound like a lot of money, but in terms of the minute management of the budget, it offers, again, that extra bit of scope."
It comes as one of the country's leading stockbrokers estimated that the gap between how much the State spends and takes in through taxes and other revenue will narrow more this year than the Government originally estimated.
Goodbody Stockbrokers forecast the deficit this year could come in below 4pc - well ahead of the prediction from the Department of Finance of 4.8pc.
It said the state should easily meet a crucial target of reducing the deficit to below 3pc of the value of the economy by the end of next year.
Goodbody economist Dermot O'Leary said: "With the Budget only two months away, it appears that the achievement of a sub-3pc of GDP deficit in 2015 will require only a small amount of additional austerity measures, if any at all."
It comes just a day after the latest Exchequer returns showed the State's finances were more than €500m off target for the first seven months of the year.
Income tax and Vat receipts are both better than expected, while the deficit is almost €800m smaller than predicted at the Budget.
Finance Minister Michael Noonan has again promised a softer budget if the tax trend continues.
Overall, the tax take is 2.5pc or €548m higher than expected so far this year.
Public spending is below target, but overruns in health remain an issue, running €273m over-budget.