According to recent reports, household income is at a record high and is continuing to increase supported by jobs and investments.
Compared to the boom period in Ireland, also referred to as the Celtic Tiger, when wealth was linked in many cases to debt-funded property assets, rising incomes are underpinned by what are described as “exceptional levels” of business investment and related employment effects, in the new research from employer’s group Ibec (Irish Business & Employers Confederation)
Ibec said in its latest ‘Quarterly Economic Outlook Q1 2019’, per-person household income is at a record high and growing each year by 6%. Low inflation has caused a rise in the impact of wage growth, giving us this reported figure.
The Ibec report stated, “Since 2015, Irish households have seen growth pf real income, per person, or just over 11% cumulatively. UK households on the other hand saw their incomes fall by 1.2% over the same period.”
They also mentioned that the pace of growth is not sustainable and will eventually plateau as the global economy shows signs of slowing.
A no-deal Brexit would also be expected to have significant consequences such as cancelled investment, falling consumer confidence, rising prices and also trade disruption.
As for now, disposable income per person is now back about pre-cash levels for the first time, according to Ibec, powered by the drop in unemployment levels and labour market participation of 83.5% for prime-age workers (25-54 years) which has never been higher.
“The Irish economy is in a sweet spot, with growth in employment and wages both hitting close to 3pc in 2018,” the report said.
Paschal Donohoe, Minister for Finance claimed that spending has been brought under control and promised that there will not be a repeat of last year’s €600m Department of Health Spending surplus.
Mr.Donohoe published a Stability Programme Update 2019 yesterday, effectively kick-starting the budget 2020 process.
Donohoe mentioned that he will deliver a budget surplus both this year and next, helped by a strong corporation tax receipts already forecasts to come in €500m above expectations this year.
“We are aiming to deliver a significant improvement in performance on health expenditure for this year”, Minister Donohoe said on Tuesday.
The first quarter receipts displayed a net Government spending of €12 billion was up 7.2% on the year but 2.6% below plan.
Donohoe said, “given the experience that I had last year, I am not at all being complacent this year.”
The total number of people working for the Government last year reached 400,000, increasing the public wages bill to €22.2 billion.
Pressures on the budget are growing, from overruns on the new children’s hospital to expensive drugs and the now rising cost of paying for the Fair Deal for nursing home care schemes.
However, surging corporation tax receipts enabled the Government to eke out a modest budget surplus last year and are already running ahead of budgeted spending increases, creating extra wriggle room this year and for Budget 2020.
Source: Irish Independent