Ireland’s headline economic figures remain volatile and heavily influenced by the activities of multinational companies, the troika has found after concluding its eighth review of the Irish economy.
While reporting that strong economic momentum is expected to continue in the short term, the review group found that risks could arise in the event of “continued strong increases in property prices over the medium term”, among other risks.
The review, conducted by officials from the European Commission, the European Central Bank and the International Monetary Fund, found that public finances have "further improved" with the government deficit expected to decline further in the short term. However, the group warned the tax base should be broadened.
Bank competition
In terms of banks, the review said it had concerns that a Bill enabling the Central Bank of Ireland to cap interest rates on variable rate mortgages, if enacted, could have negative implications for financial stability and bank competition.
Additionally, as banks’ balance sheets rebound with rising property prices, the review group suggested that development, and its sustainability, warrants “continued attention”.
The purpose of the continuing review of Ireland’s economy is to assess the country’s capacity to repay loans granted under the EU-IMF assistance programme and, if necessary, to recommend corrective actions.
The next post-programme surveillance review is scheduled to take place in spring 2018.
