EY predicts jobs boost but warns of ‘social tensions’ on pay

A new report on the Irish economy predicts that economic growth in the Republic will average 2.6 per cent until the end of the decade.

The Economic Eye Summer Forecast, an all-island report by financial services firm EY, says growth across the island will average 2.4 per cent until 2020, but the Republic would "fare much better".

Over the next 3½ years, the report estimates, about 91,000 net new jobs will be created in the South, with sectors such as construction, retail, health and others set to benefit the most. However, it estimates that close to 13,000 jobs will be lost in agriculture-related sectors as a result of that sector’s exposure to the potential negative effects of Brexit.

On an all-island basis, the report estimates that 29,000 new jobs will be created in 2017.

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EY warns that cost of living and house price inflation will put upwards pressure on wages of about 3 per cent per annum until 2020.

"If pay rates cannot keep pace with inflation, which is a possibility in the Republic and looks increasingly likely in Northern Ireland, then the economic outcome could be worse than forecast," said Neil Gibson, adviser to the report.

“With tensions rising over wage levels, particularly in public services, the likely desire to remain relatively prudent in the Republic and the austerity in the North could lead to a rise in social tensions.”