EASING up on austerity would be the greatest stimulus the Government could give, economist Jim Power has said.
At the launch of Friends First latest economic outlook, Mr Power said instability in the Eurozone and sluggish growth in the UK threatened Ireland’s recovery.
He said there was an obligation for the Government to step in and stimulate demand.
However, Ireland has given international obligations and would not be able to declare the end of austerity, in the absence of a similar move in the EU.
“The prospect of a further €5.1bn being extracted from the economy over the next two budgets is quite ominous for consumers – it is not at all clear where the axe can or indeed will fall.”
“The external outlook remains difficult – with Ireland’s key trading partners in the Euro Zone in recession and the UK economy struggling along the bottom – demand remains weak.
“Until external demand improves it is unlikely that Irish consumers will be tempted to resume spending.”
Mr Power said there were some grounds for optimism as the international view of Ireland had improved dramatically over the last two years.
“We have gone from being the basket case of Europe to the poster child,” he said.