Monday 23 October 2017

Ireland to have strongest growth in EU this year

Families gain confidence as recovery begins to takes hold

Close-up of mans hand passing over credit card to shop assistant after shopping
Close-up of mans hand passing over credit card to shop assistant after shopping
European Commissioner for Economic and Financial Affairs Pierre Moscovici

A raft of figures show households regaining financial confidence, while business optimism and economic growth are at the highest levels in Europe.

The country is getting back on track, with families finally feeling hopeful about their money situation.

Consumer confidence has hit a nine-year high – and for the first time since mid-2007 households expect income to rise in the year ahead.

The news came as the Greek finance minister urged Germany to help end the “gross indignity” of his country’s debt crisis. His German counterpart had ruled out any debt reduction.

Lower oil prices, modest income tax cuts and post-Christmas sales have boosted confidence, the ESRI/KBC Bank Consumer Sentiment Index shows.

The survey hints at stronger consumer spending this year, said economist with KBC Bank Austin Hughes. “This marks a notable change in thinking,” he added.

The index was just one of several independent studies released in the past 24 hours that suggested Ireland’s recovery was taking hold.

We are set to remain the fastest-growing economy in the EU, the European Commission said, with growth of 3.5pc predicted this year. And a rating agency said property prices were set to continue record the strongest rises in Europe.

Just a day after Finance Minister Michael Noonan declared austerity was over in Ireland, the range of positive indicators prompted hopes households may finally be putting the effects of the worst downturn in generations behind them. Other strong indicators show the “wealth” of households rose by 5.5pc last year to €125,000 per person.

The so-called net worth of households has been pushed up by rising property prices, according to new Central Bank figures.

Households paying down debt as fast as they can means borrowings per head fell to €35,000 per head.

Property prices here should see the strongest gains in Europe this year despite new Central Bank lending restrictions, a leading ratings agency said.

Lending

Standard and Poor's said prices will jump by 9pc due to lower unemployment, the improving economy and strong demand for homes, despite the new Central Bank rules to restrict mortgage lending.

The European Commission has forecast economic growth of 3.5pc here this year, to make this country the fastest-growing in Europe.

Although this is down fractionally from an earlier prediction of 3.6pc, it remains the highest forecast in Europe.

However, mortgage debt campaigners pointed out that there are still 85,000 homeowners in arrears for three months or more.

And Aer Lingus is anticipating 150 net job losses from its latest voluntary severance scheme, according to a letter sent to Minister for Jobs, Enterprise and Innovation Richard Bruton.

This was balanced by news that 150 jobs are to be created in Galway and Louth over the coming three years.

Some 100 jobs are to be provided this year at what is said to be Europe's first fully cloud-based customer engagement centre in Dundalk.

SalesSense International is a sales solution provider and was established in Dundalk less than 10 years ago.

The European Commission estimates that unemployment will fall below 10pc this year, with Government debt, still high at an estimated 110pc of the value of the economy last year, to come down over the next two years.

EU economics commissioner Pierre Moscovici said the decline in oil prices, the depreciating euro and recently launched quantitative easing programme by the ECB would provide "a welcome shot in the arm for the EU economy".

Businesses are also seeing the effects of the recovery.

Irish businesses are the most optimistic in Europe about the prospects for growth in 2015, according to research from Grant Thornton.

The study found that 82pc of businesses here are optimistic for growth this year, just ahead of those in Australia and those in Britain.

Optimistic

Patrick Burke of Grant Thornton said: "The survey shows that Irish businesses continue to remain optimistic and companies look set to grow employment and profits in 2015.

"This optimism, however, must be viewed in the context of the low point, the financial crisis, from which business in Ireland have come.

"In many ways, 2014 was the first year since the financial crisis where Irish businesses felt they were really back on track," he said.

And the manufacturing sector here recorded its sixth double digit month of annual growth in December, according to the latest data from the Central Statistics Office.

Production for manufacturing rose 15.3pc in the month, compared with the same period last year. Davy Stockbrokers said last year saw a strong rebound in industrial production.

"Clearly, Ireland's exposure to the UK and concentration in defensive sectors such as food has protected it from weak demand in Europe," said Davy analyst Conall Mac Coille.

Irish Independent

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