Tuesday 27 June 2017

GDP to expand 5.4pc this year, Ibec says

Ibec wants Finance Minister Michael Noonan to cut taxes
Ibec wants Finance Minister Michael Noonan to cut taxes

Patrick Edwards

Gross domestic product will expand 5.4pc this year, business lobby group Ibec has forecast in its latest economic report.

Ibec predicted growth of 4.8pc just three months ago. While Ibec tends to be among the most optimistic watchers of the Irish economy, its recent predictions have often been closer to reality than many other organisations.

Ibec said a combination of favourable exchange rates, quantitative easing and lower oil prices will push growth higher and push unemployment below 9pc this year.

Ibec warned however that the Government still has limited room for fiscal manoeuvre. "It should prioritise cuts to the marginal tax rate for all workers and ambitious investment in capital projects, education and innovation in the upcoming spring statement," economist Fergal O'Brien said. "Economic growth will in time translate into pay increases across the economy, but different sectors and companies are recovering at different rates.

"Two-thirds of domestic services companies and half of traditional manufacturing companies are unable to afford pay increases this year."

Public sector pension reform is urgently required and it must be part of any review of public sector remuneration, he added.

Ibec insisted that tax rates for high earners need to be cut.

Irish Independent

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