Jim Power: Two-tier economic recovery as Dublin improves but regions still suffering

ECONOMIST Jim Power said today that the economic recovery is being felt mainly in the Dublin region while other parts of the country are continuing to struggle.

“If this recovery is to spread from the Greater Dublin Area to the rest of the country – there needs to be a policy shift at a national level to support this process and to bring jobs to the regions,” he said today.

And while the economic fundamentals are pointing in the right direction with employment improving, 60,900 jobs created in 2013, and retail sales up 5.6pc there are still hurdles.

The economy is also growing and Mr Power added risks and vulnerabilities still exist such as sovereign, personal and SME debt which could very quickly derail a domestic recovery.

“The Government’s recently announced Construction 2020 plan, which includes proposals for new State support in the form of mortgage insurance for young couples, while positive, must be accompanied by a significant supply side response,” he said.

“Simply increasing demand without matching with supply would be reminiscent of the bad old days.”

He added: “While the US and the UK economy are holding their own, the eurozone economy remains in a very difficult place and is characterised by low growth, high unemployment, high levels of sovereign debt and deflationary threats.

“The ECB will have to keep interest rates at the current low levels and possibly ease further,and may have to resort to quantitative easing of money supply, to prevent the eurozone from becoming stuck in a deflationary spiral.”