Construction slowdown would rock Irish economy, experts warn

Unemployment in Ireland will rocket if there is a slowdown in the construction industry, the state’s economic research group has warned.

The Economic and Social Research Institute in Ireland warned that the national economy was heavily dependent on the construction industry and so any downturn in the industry would have serious consequences for the economy as a whole.

The institute’s medium term review of the economy from 2005 to 2012 suggested that incentives that had fuelled the building boom should be removed either by moderating state spending or through fiscal instruments. In addition the economy should be steered towards other sectors. The report said: “The Irish economy’s future lies more in services that are produced using skilled labour than in the traditional manufacturing sector.”

Other danger factors for the economy were high levels of household debt, the prospect of a slowing in growth worldwide and a backlash by neighbouring states against Ireland’s low corporation tax regime.