THE ECONOMY of the island of Ireland needs a significant spending stimulus to revive domestic demand, a new trade union-funded think tank has said.

In its first Quarterly Economic Observer report, the Nevin Economic Research Institute yesterday urged the Government to put in place a €15 billion investment package.

The investment/stimulus measures would be “targeted, frontloaded, strategic and temporary”, focusing on improving telecommunications, energy and water infrastructure. Investment in early childhood care and the retrofitting of existing homes with energy-saving technology are also advocated.

The think tank claims the €15 billion could be raised without impacting on the national debt.

It is envisaged that one-third of the total investment would come from the National Pension Reserve Fund, one-third from private sources and one-third from the European Investment Bank.

The report also recommends a €5 billion stimulus package for Northern Ireland.

The report does not claim such an all-island stimulus would end the recession and return the economy to health, but does say it would provide momentum in the short term and boost growth capacity in the long term.

Over the five-year period of the package – 2013-2017 – the report gives estimates of an additional 262,000 jobs being created, while it is envisaged gross domestic product would rise by €25 billion.

The report rejects the view of many economists that the stimulus effect of the package would “leak” out of the economy, owing to its high levels of imports.

The new institute is supported by a number of unions affiliated to the Irish Congress of Trade Unions and is part of the Trade Union related Research Institutes.

The purpose of the report, according to its authors, is to “equip trade unions and others in articulating and advancing a new economic paradigm where the old one has failed”.