Bank predicts 30,000 building jobs to be lost

Ulster Bank has forecast that 30,000 jobs will be lost in construction in the next two to three years as the building sector slows down.

Ulster bank predicts a loss of 30,000 construction jobs in the next two to three years. Image: Irish Times.

At an economic briefing, chief economist Pat McArdle also said the unemployment rate would rise to 5 per cent by the end of 2008.

However, Mr McArdle said the perception that the economy was struggling was incorrect and that Ireland's economy would grow strongly over the same period.

The bank predicts there will be just one more interest rate rise in the current cycle by the European Central Bank (ECB), which would bring interest rates to 4.25 per cent. The ECB has doubled rates over the past 20 months.

British interest rates, which hit 5.75 per cent this month, are also now at their peak of the current cycle, according to Ulster Bank.

Looking at exchange rate movements, the bank said euro could hit $1.40 or higher against the US dollar in the short-term. US currency should recover over the coming months, the bank forecasts.

It adds that of global growth is being rebalanced away from the United States and that real GDP in the euro area is expected to grow at a faster pace than the United States this year, breaking a run of seven consecutive years of relative under performance for the euro zone.