Ireland To Plunge Into Recession - Starting Now

A recent economic survey is warning Ireland's economy could be facing its first recession since 1983.

The latest review by the Economic and Social Research Institute (ESRI) has predicted the national economy will slump by 0.4% on last year, as the housing sector along with customer spending continues to drag its heels.

According to the Quarterly Economic Commentary document, released on Tuesday, Ireland is to "experience its first recession since 1983" if it's forecasts are correct.

However, the Institute has implored the government not to introduce reactionary correction measures such as slashing public spending, as ironically in light of the recent Lisbon treaty rejection, Ireland must meet a 3% growth target or it could face being kicked out of the EU.

A statement by the ESRI said: "Although it appears that the 3% deficit limit under the Stability and Growth Pact will be breached in 2009, we argue that the required fiscal correction be spread beyond 2009."

Instead, the institute advocates building from within and using Ireland's considerable man power resources to pull itself from the clamping jaws of depression.

"With unemployment on the increase, the state's agencies with responsibility for education, training and job placement need to ensure the delivery of effective programmes to those who are likely to experience difficulties in regaining employment."

However, this may be an increasingly difficult challenge as the report also predicts a huge upsurge in migration due to rising unemployment, which is expected to reach 20,000 by 2009.

Fine Gael Labour affairs spokesman, Damien English TD, blamed the government for its failures to capitalise on the boom period.

"One of the many reasons for the current downturn is Ireland's dramatic loss of competitiveness. In ten years Ireland has fallen from fourth place in the world to 22nd, as measured by the World Economic Forum," he said.

However, bust is often followed by boom, and a recovery is expected to begin next year as although inflation is to stay high at 4.5% this year, it is expected to fall to 3% next year as food and oil prices ease.

(DW)/JM