Irish News

Tuesday 22 July 2014

Ireland to lead way with eurozone growth

Thomas Molloy

Published 23/02/2013|04:00

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Recession in the eurozone will last longer than expected, the EU Commission predicts

THE Irish economy will grow faster than any major economy in the eurozone this year and next year, the European Commission has forecast.

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Ireland's growth will stand in stark contrast to many of the other economies in the single-currency zone, which are expected to slip into recession.

Our economy will expand 1.1pc this year and 2.2pc next year, the EC said.

Unemployment here will fall slightly to 14.6pc this year and 14.2pc next year but rise close to these levels elsewhere in the single-currency area. Only tiny Malta and Estonia are expected to out-perform Ireland.

While the economy here is now expected to expand for the fourth straight year in 2014, the eurozone as a whole is expected to contract again this year, before returning to growth in 2014.

Struggling Spain and France will be among those who miss debt-cutting targets as a result, the commission said.

The French and Portuguese governments said yesterday they would seek more time from Brussels to reach their deficit goals. Madrid has already indicated the same.

Under EU budget rules, tightened at the peak of the financial crisis in late 2011, eurozone countries can face fines if they fail to take action to meet deficit targets set by the EU.

Eurozone countries whose economies perform much worse than expected can count on an extension of deficit deadlines.

Target

But they need to show that while they missed the nominal deficit target because of recession, they have still cut the structural deficit, which strips out the effects of the economic cycle and one-off effects.

Portuguese Prime Minister Pedro Passos Coelho said Lisbon needed an extra year to get its budget deficit under 3pc given a weaker-than-expected economy. While Ireland's debts remain among the highest in the world, the country is on track to meet the deficit targets after beating targets last year.

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