Friday 18 October 2019

Economy on the road to overheating - watchdog

Government warned long-term spending plans 'lack credibility' and 'look unrealistic'

Seamus Coffey, the chairman of the Irish Fiscal Advisory Council. Photo: Daragh Mc Sweeney/Provision
Seamus Coffey, the chairman of the Irish Fiscal Advisory Council. Photo: Daragh Mc Sweeney/Provision

Kevin Doyle, Donal O'Donovan and Gavin McLaughlin

THE economy is now close to its peak and is facing a number of risks that could cause it to crash, the country's budgetary watchdog has warned.

Head of the Irish Fiscal Advisory Council, Seamus Coffey, will today say that Finance Minister Paschal Donohoe's long-term spending plans "lack credibility" and "look unrealistic".

As new figures show bumper corporation tax receipts for November, he will caution that the economy is "close to its potential".

Mr Coffey, who will address the Oireachtas Budget Oversight Committee today, said forecasts suggested economic growth would "move beyond potential from 2019 onwards, with overheating emerging in later years". He will also warn that predicting the economy's performance in the coming years will be difficult.

He highlights a number of risks on the horizon - a more costly Brexit than assumed, and overheating in the housing market if construction picks up faster than expected.

His warning comes as foreign investors are being encouraged to cash in on our housing crisis.

The lack of homes and spiralling rents have helped to make Dublin the third-most attractive city in Europe for big property investors, according to accountants PwC. It came behind Lisbon and Berlin.

Rents have soared as a result of the shortage of housing, making it more expensive for individuals to rent or buy.

But that makes the city more attractive for big investment funds, who can get a bigger return as rents grow.

With supply in the capital continuing to lag behind demand, investors look set to do well for a number of years, says PwC.

The growth of big tech companies is adding to the demand for housing.

Read more: Donohoe spending plans lack credibility: watchdog

Irish Independent

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