Ibec cuts economic growth forecasts as it warns regions remain vulnerable
The business lobby group expects growth of 3.9% this year, down from 4.7% previously
Business lobby group Ibec has said the economy should be able to weatherthe impact of Brexit this year but the regions remain vulnerable as it cut its economic growth forecast for 2016 to 3.9 per cent from 4.7 per cent previously.
It expects growth of 3.2 per cent next year, down from a previous estimate of 3.9 per cent, as it said the outlook for 2017 was "much more uncertain".
In its latest quarterly outlook, Ibec warned thatthe sharp fall in sterling since the UK voted to leave the European Union in the June referendum was putting pressure on exporters, particularly in the regions.
"The exporting industries most affected by the sterling fall are typically jobs intensive and deeply embedded in local economies," Ibec's director of policy Fergal O'Brien said. "This adds to the risk that some parts of the country will be disproportionately hit."
Ibec noted that regional employment was already mixed with the west experiencing a considerable lag over the last four years compared to other parts of the country. It said the budget must include a series of tax reforms along with targeted investment to support balanced growth and job creation across the country.
To deal with Brexit pressures, it called for the budget to match the UK tax offering for indigenous businesses as well as for radical reform of the capital gains tax regime for entrepreneurs as well as improvements in incentives for investment and innovation.
The lobby group also called for available resources to be invested in areas such as infrastructure, housing and education and called for more flexibility on the application of EU fiscal rules to allow for urgently-needed infrastructure investment.
"Government must be much more assertive in making the case in Brussels," O'Brien said. "Ireland desperately needs to spend much more on transport, housing and education infrastructure, while also remaining prudent on day-to-day spending commitments. Under ambition is a real risk."
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