ESRI report: Thousands more will leave Ireland
Tens of thousands more will flee Ireland next year as the chances of recovery hang on the outcome of the eurozone crisis, a leading think-tank has warned.
Deepening international uncertainty over the future of the euro has forced a more pessimistic rethink on the prospects at home, according to the latest study.
The Economic and Social Research Institute (Esri) revealed its forecast for next year is worse than previously thought because of ongoing financial turmoil globally.
The homegrown economy is expected to grow at less than 1% during 2012 – barely half of what was predicted in the think-tank’s last quarterly report.
The downgrade is based on an anticipated hit on Irish exports because people around the world will buy less during the uncertain climate.
Shoppers at home are also expected to squirrel away savings and spend less, contributing to a 1.5% drop in demand for goods and services despite former forecasts that it would remain stable.
David Duffy, co-author of the Esri report, said the result will be an increasing difficulty for Ireland to pay off its repayments under the EU/IMF rescue deal.
“For the forecast period that we are looking at – 2011 and 2012 – we should meet our targets,” he said.
“But beyond that it depends on the international environment and if that continues to deteriorate, then that would make meeting our targets more difficult.
“Ultimately it’s what happens internationally that will determine the outcome for Ireland.”
Unless the international mood picks up, Ireland faces even bigger spending cuts and more punishing tax hikes than already anticipated to meet the terms of the bailout agreement.
Both unemployment and emigration are forecast to continue next year.
The number of people working should dip from 1,807,000 to 1,785,000 – a drop of 22,000 – but many of these job losses will not show up in the official unemployment figures because around 40,000 people are expected to emigrate.
The Esri said that will be on top of the 35,000 people who will emigrate this year.
Unemployment next year is predicted to average around 303,000 or 14.5% of the workforce, according to the report.
Mr Duffy said a worst case scenario for Ireland in the coming months was a break-up of the eurozone, which would plunge the country further into crisis, but he added the Esri was “reasonably optimistic” about a resolution.
