Weak start to year, but signs of renewed economic momentum – Ibec
Despite a weak start to the year there were clear signs that the economy had picked up in recent months, according to Ibec’s latest Quarterly Economic Outlook.
Ibec said that the second half of the year provided a crucial opportunity to restore normality to the property market, which would in turn have significant wider benefits for the economy. The recent annual rise in national property prices suggests the market has finally stabilised; new targets to address the high level of distressed loans will determine if we can restore sustainable growth and a functioning, efficient mortgage market.
“It was a difficult start to the year, but there are signs of renewed economic momentum in the economy,” said Ibec’s head of policy and chief economist Fergal O’Brien.
“Companies say trading has improved in recent months and the good weather, along with positive economic news from the UK and the rest of Europe should help. Consumers, however, remain cautious. It is crucial that the Budget sends a clear signal that the end of austerity is in sight.
“The tough austerity programme of recent years means we now have choices that we previously didn’t. Irish taxpayers deserve a break. Plans to increase taxes by €500m should be dropped. Even if the fiscal adjustment is reduced from €3.1bn to €2.6bn we will still reach the 2014 deficit reduction target.
“We now have an opportunity to fix the property market. Prices have stabilised and new steps to deal with distressed mortgages should help restore a level of normality to the market. Those that can’t pay their mortgage need to be offered new terms and a sustainable solution. Those that can pay, but refuse, need to face up to their obligations or face the consequences. The wider economic and social benefits of a functioning and sustainable property market are enormous. Tough political choices are required, but we need to draw a line under the problems caused by the property crash and move on.
“Ireland’s economy has the capacity to grow by 3–4pc per year for the next decade, but only if we make the right decisions. Budget 2014 is an opportunity to support consumer confidence and help businesses grow and create jobs. It is vital that the opportunity is not missed.”