Ernst & Young cuts prediction to 0.1%
Ernst Young yesterday came out with one of the lowest predictions for Irish economic growth in 2012, downgrading its growth projection to just 0.1 per cent from 0.5 per cent previously. However, the professional services firm predicted that exports will remain “on target”.
Due to continuing weak domestic demand and uncertainty in the euro zone, Ernst Young says “tighter fiscal policy, higher taxes and widescale public sector job cuts will now have a greater negative impact on economic growth in 2012 than previously expected”.
Last month the Economic and Social Research Institute (ESRI) forecast growth of 0.9 per cent for 2012, Goodbody Stockbrokers’ prediction is growth of 0.7 per cent, and Davy Stockbrokers predict 0.4 per cent growth.
According to Ernst & Young, unemployment will peak at 15 per cent in the fourth quarter of this year and will average 14.8 per cent for 2013. In addition, it says “austerity fatigue” will depress consumer confidence and spending will fall by 1.2 per cent in 2012 and a further 0.8 per cent in 2013.