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2017 economic outlook uncertain, business group Ibec warns

Published 19/09/2016

Ibec's key priorities for budget 2017 include managing acute Brexit pressures such as matching UK tax incentives
Ibec's key priorities for budget 2017 include managing acute Brexit pressures such as matching UK tax incentives

The economic outlook for next year remains uncertain, business leaders have warned.

Although the country looks set to weather the Brexit shock throughout 2016, pressure on exporters and poor employment rates in part of the country mean the 2017 forecast is much less stable, Ibec said.

Fergal O'Brien, Ibec director of policy, said: "The exporting industries most affected by the Sterling fall are typically jobs intensive and deeply embedded in local economies.

"This adds to the risk that some parts of the country will be disproportionately hit. Already, regional employment performance is mixed.

"The west (Galway, Mayo, Roscommon) has experienced a considerable lag over the past four years compared to other parts of the country.

"Budget 2017 must include a series of tax reforms along with targeted investment to support balanced growth and job creation across the entire country."

Ibec's quarterly economic outlook survey has predicted growth of 3.9% this year - a figure which was revised down in light of Brexit - and 3.2% in 2017.

Due to strong gains achieved in the first half of the year, Ibec expects employment growth of 2.8% this year, the report said.

Despite weak numbers in the second quarter of the year, improvements in the labour market mean consumer spending is still expected to grow by 4.9% in 2016.

The weak Sterling will also have a negative impact on exporters in the second half of this year and into 2017.

Meanwhile, Ibec's k ey priorities for budget 2017 include managing acute Brexit pressures such as matching UK tax incentives.

The body also said enterprises should not face any regulatory, labour cost or tax increases during the current period of uncertainty and exchange rate volatility, and called for resources to be "invested wisely" in the economy through infrastructure, housing, education, innovation and labour market measures.

Mr O'Brien said: "It's good to see others now recognise the need to reform EU fiscal rules to allow for vital additional infrastructure investment. Ibec has been highlighting the problem for a long time.

"Government must be much more assertive in making the case in Brussels.

"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."

Ibec have also said it would be wrong to ignore the negative attention arising from the Apple tax controversy.

Mr O'Brien added: "Recent Commission corporate tax decisions and the massive spike in Ireland's 2015 GDP figure have put the country back in the international spotlight.

"It would be very wrong to ignore the negative international attention. We again need to communicate, indeed champion, the merits of the Irish economic model and the underlying strength of our enterprise base."

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