No jobs will be created as we keep hands in pockets -- ESRI
THE economy will not create any jobs this year -- while those in work will be keeping their debit and credit cards in their pockets as higher income taxes unveiled in last month's Budget further dampen consumer spending, the Economic and Social Research Institute (ESRI) predicts.
The state-funded think-tank predicts the economy will continue to bump along the bottom this year with few signs of growth.
Next year is forecast to be a little better, but the ESRI has repeatedly warned that much could happen between now and then to derail the modest growth predicted in 2012.
Even exports, the one part of the economy that has held up well during the past three years, is seen slowing from the present "unsustainable" levels of growth.
Just a few weeks into the new year, the ESRI has trimmed its forecasts for gross national product to 0.25pc, blaming the Budget, which took more money out of workers' pockets; something the ESRI believes will slow growth. Growth next year is seen rising to 1.5pc.
"While we expect the economy to register positive rates of growth in 2011 and 2012, the rates will be sluggish, especially when compared with the scale of the recent decline," the ESRI's Alan Barrett said.
This slowdown will have a knock-on effect on the percentage of general government debt to gross domestic product, which is projected to hit 99pc this year and 104.5pc next year -- more than two percentage points higher than the Government's forecasts.
"There may be some slippage," Prof Barrett said, while maintaining the Government was on track to meet the European Commission's demand that borrowing be reduced to less than 3pc of GDP by 2016.
On the jobs front, unemployment is seen averaging 13.5pc this year and 13pc next year as the so-called jobless recovery continues.
Most economic growth will come from increased productivity and exports, which do little to create employment. This will lead to an average of 50,000 people leaving the country in the 12 months to April and another 50,000 in the following 12 months.
Consumer demand, which makes up anything from half to two-thirds of the economy, is seen shrinking yet again this year and next year as families save for the rainy days they suspect are still to come and pay off mortgages and household debt.
The public's reluctance to spend is causing continued problems for companies here.
Glanbia, the Kilkenny company that produces a third of Ireland's cheese and milk, warned yesterday that economic difficulties here continued to create a "challenging trading environment" for consumer products.