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Brussels cuts growth forecast

THE European Commission has cut its growth forecast for Ireland for 2012 to 0.4pc, down from 0.5pc.

The commission said the country's risks remained broadly balanced.

"Downside risks stem from the uncertain external outlook, especially trading partner demand, although the Irish export sector decoupled successfully during the first years of the crisis," it said in its autumn forecast.

It noted that expiring patents could reduce growth in chemical exports and warned that consumer spending could be hit if house prices fell further.

The commission also cut its forecast for Ireland's gross domestic product (GDP) for 2013 -- the third downward revision in six months.

It now predicts a rise of 1.1pc, compared to earlier forecasts of 1.4pc.

The new prediction for next year matches the level to which the International Monetary Fund cut its estimate last month.

But Brussels sees growth accelerating to 2.2pc in 2014, meaning that Ireland's economy would grow at a faster pace than Germany's for the second year in succession.

However, this is still less than the 3pc that the Government has factored in.

The commission said it believes the Government will be able to trim the budget deficit to a better than targeted 8.4pc of GDP this year and remain on course to lower it to 5pc by 2014.