Lack of infrastructure spend poses 'threat of recession'

A lack of State spending on infrastructure could make a prolonged recession more likely in the future, according to Construction Industry Federation director, Tom Parlon.

Addressing this year's National Construction Summit, Mr Parlon warned that a decade of under-investment in vital projects such as roads, schools and hospitals is about to hit home at a time when the population has increased by 30 per cent and the economy is the fastest growing in Europe.

“I am here with a clear warning today, the historic lack of investment in infrastructure is making a prolonged recession in our future more likely,” he said.

Mr Parlon added that the Republic comes last in the EU 28 when it comes to the proportion of its wealth that it spends on infrastructure.

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He noted that since the last recession began 10 years ago, successive governments have allowed spending in this area to fall below 2 per cent of gross domestic product, that is, the wealth generated by the Republic’s economy.

The construction chief pointed out that the State was recovering and that there was cheap finance available from the EU.

However, he argued that Europe’s budgetary rules, which regulate what the Government can spend and borrow, were actually hampering spending on vital projects.

Mr Parlon said that the Government could not afford to wait until next year, when it may have more scope for spending if State hits its growth targets.

“The EU must be convinced of Ireland’s case to enable increased investment by our politicians,” he said.

Mr Parlon added that it would be "tremendous legacy" for the new Taoiseach, Leo Varadkar, if could convince the EU to relax its rules.