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Prophets of boom: EU predicts strong economic growth

February 16, 2011

By Staff Reporter

By Andrew Bushe

DUBLIN — Spectacular economic predictions for Ireland have been made by the EU, whose autumn figures forecast better than 11 percent growth this year, which is almost four times the European average.

In the final forecast before the start of monetary union involving 11 countries on Jan. 1, the only negative factor for Ireland is inflation, which is expected to average 2.7 percent this year, a full point above the EU average.

What’s more, for the next two years, inflation is expected to rise to 3.1 percent — the highest rate in the EU.

Still, the Brussels study predicts a continuing boom leading to more jobs and windfall tax revenue for the government.

"The Irish economy is very robust; the growth is the best in Europe," said Yves-Thibault de Silguy, EU Monetary Affairs commissioner.

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He said it was important for Ireland to control inflation when entering the Euro in order to ensure future competitiveness.

Finance Minister Charlie McCreevy responded to the predictions with caution. While he would like to believe the economy would grow by almost 18 percent in the next two years "simple common sense," he said, dictated that the global economic environment would result in more moderate growth.

Since their spring forecast, the EU has revised its growth forecast for Ireland upwards this year by almost 3 percent.

The figures show a booming economy expected to surge ahead at three times the rate of its European partners and likely to continue doing so for several years.

Ireland’s growth, it says, will be 11.4 percent this year, with a slowdown to 8.2 percent next year, but accelerating again in the year 2000 to 9 percent.

In contrast, the study predicts 3 percent average growth for the 11 Euro countries this year and has revised its forecast down from 3 percent to 2.6 percent next year as a result of the impact of the global financial problems.

The figures will not help the government in its battle to maintain the flow of aid from Brussels when Taoiseach Bertie Ahern tries to negotiate new economic and farming grants.

The EU expects Ireland to have a budget surplus of 2.1 percent this year, rising to 3.4 next year and 4.6 in the year 2000. The debt to GDP ratio is expected to be half the European average by 2000.

The unemployment rate, meanwhile, is also plunging, with a rate of 8.7 percent this year in comparison to the EU average of 10 percent.

The jobless rate is expected to drop to 7.4 percent next year and 6.2 in 2000 when the rate for the EU overall is expected to be 9.

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