Growth and jobs forecast looking rosy up until 2020

Tens of thousands of jobs will be created in sectors from construction to IT by 2020 as Ireland's economic growth continues to outpace the rest of the European Union, according to a report published this morning.

The Economic Eye Winter Forecast from financial services firm EY predicts that Ireland's economy will expand by 3.1pc this year and 2.9pc in 2017.

Those predictions are lower than the forecasts published last week by the Economic and Social Research Institute (ESRI). The ESRI believes the Irish economy will grow by 3.5pc next year. But it based its projections on growth in gross domestic product, while EY's projections are based on growth on gross value added.

EY said in its report today that the economy will enjoy an average annual growth rate of 2.7pc between 2016 and 2020.

It added that the economy will be bolstered by increased employment and consumer spending.

EY believes the numbers employed by the civil service will remain largely unchanged during the next four years, but that in the health and education sectors an additional 14,000 jobs will be created.

It adds that the retail sector is set for a resurgence in employment growth, with 24,000 jobs expected to be added in the industry by 2020.

The construction sector will add almost 21,000 jobs, while information and communications will see another 10,700 jobs created.

But EY has warned that not all sectors will see an improvement.

Some will face increasingly challenging conditions after Brexit, and as a result of weakened sterling.

It said that the agricultural sector will lose 10,500 jobs by 2020, having gained almost 30,000 on an all-island basis since 2012.

"With uncertainty ahead of us, any economic forecasts must be highly conditional at this point, and that is likely to be the case for at least the first half of 2017 as divorce negotiations between the UK and the EU continue," said Neil Gibson,economic adviser to the EY report.

"However, the island economy, and the Republic in particular, enters this turbulent period in ruder health than might have been expected, with employment rising and growth in Ireland continuing to top the European charts."

But Mr Gibson warned that while the outlook for Ireland is to create more jobs, much depends on the type of EU exit deal the UK secures.

The EY report has predicted that growth in Ireland will be relatively strong compared to that in Northern Ireland and Britain, buoyed by consumer and investment spending, which the firm believes will provide a buffer against slower government spending.

"Consumers…are expected to power ahead with their spending, having emerged in 2014 from a downturn in consumer spending," according to EY.

It added that growth in consumer spending in Ireland is expected to average 2.7pc a year between now and 2020, as low inflation, more people in employment and 3pc growth in disposable incomes combine to propel spending.

EY also forecast that while Northern Ireland will avoid a recession in 2017, economic growth there will be just 0.5pc next year. In 2018, the economic expansion rate in the North will increase to 1.2pc, and to 1.7pc by the end of the decade, according to EY.

The report also expects that 6,000 jobs will be lost in Northern Ireland by 2020, as it leaves the European Union.

EY has based its assumption on a so-called 'hard Brexit' scenario.

From Irish Independent  (19/12/2016)