EU expects Republic’s economy to grow by 8% this year

THE Irish economy is expected to grow at a rate of 7.8% this year, according the European Commission, although the pace will slow from next year.

The EC report came on the same day that the International Monetary Fund issued its latest assessment of Europe, in which Germany’s outlook for this year was cut dramatically and it warned the region would be hit hard by global trade wars and Brexit.

The Commission said it expected Ireland to grow by an average rate of 4% between 2018-20 and it expects the budget to post a surplus.

But it also sounded a note of caution over the Republic’s dependence on tax revenues from a handful of multi-national companies and “over-spending” on the health sector.

A snapshot of Irish Government finances last week showed that at the end of October the pace of spending saw a 9.2% rise to €40.1bn (£34.9bn).

The Republic spends a third more than the average across the Organisation for Economic Co-operation and Development (OECD) group of rich nations.

The IMF report was more so- bering and pointed to risks in the global environment as well as highlighting a sharp drop in Germany’s performance this year. It cut its outlook for rich European nations by 0.3 percentage points in 2018 and 0.1 percentage points in 2019, with Germany cut by a 0.6 percentage points.

“Given Europe’s trade openness and deep integration into global value chains, an intensification of trade tensions could have a significant impact, especially if accompanied by tighter financial conditions,” the IMF said, referring to interest rates.

The EC and IMF reports come after a report by Goodbody Stockbrokers said the Irish economy is growing at its fastest pace since 2006.

Goodbody said the Irish economy’s gross domestic product would grow by 5.9% this year and by 3.3% in 2019.