Sunday 17 December 2017

Squeezing the middle too tight

Yesterday's announcement of an average 9pc price increase from the VHI represents more bad news for Ireland's squeezed middle-income earners. The latest price increase, the third in the space of 13 months, will add another €150 a year for a family of two adults and two children in the VHI's most popular plan, OnePlus.

The VHI announcement came on the same day that the Central Bank slashed its economic growth forecasts for 2012. It is now expecting the economy as measured by GDP to grow by just 0.5pc this year. Even more importantly for most of us who make a living in the domestic economy, the Central Bank expects the economy as measured by GNP, which excludes repatriated multinational profits, to shrink by 0.7pc in 2012.

This means that the domestic economy will have contracted for five successive years bringing the contraction since the 2007 peak to almost a fifth. This is not a conventional recession but something more akin to a 1930s-style Great Depression with the dole queues and banking crisis to match.

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