'Start acting like a rich country' - Ibec and EU call for infrastructure

2020 02 27 Bus 57288404 I1

Business group Ibec and the European Commission have both called on the Government to remove bottlenecks in housing, infrastructure and education to ensure Ireland's economy can grow.

Since the end of the financial crisis, Ireland's economy has staged a strong rebound and topped the eurozone growth league, but after six years of expansion, it is now running up against housing shortages and poor infrastructure as well as labour shortages.

Even with the impending threats of Brexit and coronavirus, both the Commission and Ibec expect strong growth again this year, with the former looking for a 3.6pc rise in gross domestic product and the latter for 3.7pc.

While changes to international tax rules will hit the Exchequer - whose coffers have been filled by a surge in corporation tax receipts - there is a greater risk from underinvestment, Ibec believes.

"But we remain a rich country," the business group said in its quarterly economic report issued today.

“There needs to be a social dialogue process and Commission on Taxation to help us manage the trade-offs involved in beginning to act like one," it said.

Ibec noted that Ireland has the fourth lowest level of public expenditure to national income in western Europe.

That need for investment and changes to the tax system are concerns that are shared by the European Commission whose own report assessing the State's economic vulnerabilities was released yesterday.

The pace of house price rises has slowed to just 0.9pc over the past year, although the Commission noted that was primarily driven by a weakening of the top end of the market, something that does not help those struggling to get on the property ladder or in the private rented sector where costs are up 4pc.

"Housing scarcity remains a pressing issue, including rising homelessness due to shortages of social housing," the Commission reported.

Transport is also creaking, thanks to years of underinvestment and record numbers of people in work. There were a total of 268m journeys made via public transport in 2018, surpassing the pre-crash peak of 260m.

Investment in public transport could go some way towards meeting emission reductions where the State is currently failing.

"Investment in public clean transport would be required to ease congestion and reduce carbon emissions. The return to economic growth and the suburban sprawl has led to a high share of workers commuting daily from outside the main cities," the Commission said.

With the economy at full employment, the Commission raised concerns that skill shortages have begun to emerge and the State lags when it comes to female participation in the workforce, which overall has low levels of skills.

"Providing workers with the skills required, including digital and those for a smooth and just transition to a climate neutral economy, would require investing more in education and training," it said.

Data released yesterday by the Central Statistics Office showed that - in inflation adjusted terms - education spending here remains below 2010 levels and that spending per student in third level education has fallen to €7,089 in 2016 from a peak of €11,676 in 2008.

"Expensive housing, long commutes and stretched health and education systems are making Ireland a less attractive place to live, work and invest," said Ibec.


This article was first seen on https://www.independent.ie/business/irish/start-acting-like-a-rich-country-ibec-and-eu-call-for-infrastructure-38993983.html