A slowdown in the construction industry is likely to see 35,000 jobs lost in the sector over the next 18 months, according to Davy Stockbrokers.
In a statement issued today, Davy said it expects 4.5 per cent GNP growth in 2007, with the second half of the year weaker than the first six months and that the economy will slow to 3 per cent growth next year.
The report notes that strong growth in other areas of the economy such as exports, infrastructure, and commercial building will partially offset the slowdown in residential building.
According to Davy, housing completions will start to fall between now and the end of the year and that unemployment will creep up to 5 per cent by the end of 2007 before reaching 6 per cent by the end of 2008.
A reduction in stamp duty and capital gains taxes reaching the Exchequer will see the Government miss its revenue target by at least €1 billion this year, the Davy report says.
However, the report still sees a surplus of 0.5 per cent on the general government balance this year. It suggests that the Government should use fiscal policy to deliver tax cuts to sustain economic activity.