THE Irish Business and Employers' Confederation (IBEC) had warned that failure to implement a new national pay agreement would result in "significant hikes" in interest rates.
In its latest quarterly review, the group warned that qualification for monetary union next year cannot be taken for granted. "It is essential that whatever follows the current agreement does not jeopardise Ireland's ability to join the single currency.
"Failure to do so would result in a significant hike in interest rates, and for many mortgage holders the increase in monthly payments would outstrip any gains in gross incomes.
It warned that there will be "considerable pressure" on the Government to take short term decisions as it faces into an election next year.
IBEC also increased its predictions of economic growth last year to 9 per cent in Gross Domestic Product following buoyant export growth of 16 per cent. Looking to 1997, IBEC forecasts a fall in the longer term growth rate of around 4 per cent.
