Fianna Fáil Spokesperson on Finance Michael McGrath TD has welcomed the Central Bank’s latest economic forecast for the economy but has warned there is no room for complacency on the economic front.
Deputy McGrath commented, “The Central Bank’s forecast of growth in economic output of 4.4% in 2018 is very encouraging and is further evidence of a faster than expected recovery in the Irish economy.
“However, the Government needs to be wary of challenges on several fronts and should be preparing now for the inevitable less favourable economic conditions down the line. There is a risk of the economy overheating and Government must be prepared to address this if clear evidence of this emerges.
“The Irish economy will continue to face significant challenges in the period ahead in the form of Brexit, the housing crisis, skills shortages, international tax changes and infrastructure deficits to name just a few.
“At some point, the ECB will change its monetary stance and any rise in interest rates will cause problems for Irish consumers and possibly for the State borrowing on the international markets. The Government also needs to heed the warning from the ESRI of a growing gap in prosperity between Dublin and the rest of the country.
“Now is the time for the Government to put in place a meaningful Rainy Day Fund to act as a buffer for a future downturn in our economy. Such a fund needs to be carefully designed and there is a need to secure the support of the European Commission on the interaction of such a Fund with the fiscal rules.
“The main benefit of a well-designed Rainy Day Fund is that – when tougher economic conditions emerge – the Fund can be deployed as a counter cyclical measure to boost the economy and support public services the State has to provide,” concluded McGrath.