Irish Economic Growth Likely To Be Slow In 2003, Says AIB

by Jason Gorringe, Tax-News.com, London

22 January 2003

Analysts at AIB have suggested that 2003 is likely to be a year of sluggish economic growth for the Irish economy, with tax increases, higher charges for services including health insurance, electricity, and transport, and rising unemployment all taking their toll.

Outlining his 2003 budget in December, Finance Minister, Charlie McCreevy announced that: 'This should be a period of consolidation. There will not be a period of tax reductions this year, next year, or the year after.'

Although he did move to increase the tax free PAYE allowance to 800 euros in order to lessen the tax burden of many of the Republic's lowest income workers, Mr McCreevy also upped the income tax exemption limit for elderly taxpayers, increased the lower rate of VAT from 12.5% to 13.5%, and closed several tax 'loopholes', leaving portions of the Irish population substantially worse off.

In its Monthly Market Focus, AIB analysts observed that:

'Looking to the year ahead, we expect that rising unemployment, high inflation, slower income growth, and weak consumer confidence will dampen household expenditure, limiting growth in consumer spending to 3.5%.'

However, according to Ireland's Business World website, this figure is up from the 3.0% growth in spending last year, which was curbed by the rush of consumer cash into SSIAs.

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