ESRI 'could have done a better job'

The director of the Economic and Social Research Institute has admitted the agency could have done a better job in anticipating the extent of the financial crisis.

Prof Frances Ruane said this morning there was a lack of expertise in macro-economics within the ESRI, and the agency was dependent on material produced by the Central Bank and the Financial Regulator on which it based its reports.

Prof Ruane was speaking following criticism from the Department of Finance, which in defending its performance in failing to forecast the extent of the downturn, pointed to similar failures by the ESRI and other institutions.

The department said it warned the Government from 2005 onwards about the dangers of a property bubble and that "over-emphasis on construction left the economy vulnerable to macroeconomic shocks".

She acknowledged there was a gap in the ESRI, particularly in the banking side of things.

"It was partly on our side a lack of specialist knowledge," she told RTÉ's Morning Ireland.

"There is a tendency for people in talking to each other to reinforce each other's thoughts."

The ESRI had tried unsuccessfully to recruit macroeconomists to fill the gap, Prof Ruane said. "I think if we had had the resources we probably could have done a better job in coming in earlier and realising there was a problem. We knew there was a gap," she said.

Prof Ruane said the ESRI did not know what was going on behind "the wall of banking".

The independent think-tank, which celebrates its 50th anniversary this year, had expressed concerns about the scale of construction in the economy, Prof Ruane said.

However, she denied that any government funding it received coloured ESRI analysis. "We very often annoy Government in terms of what we say," she said.