Ireland's economy is now facing zero per cent economic growth this year following a near total collapse in the number of new houses being started since the start of the year.
This is according to new figures obtained by the Sunday Independent, published today. Finance Minister and Taoiseach-in-waiting Brian Cowen is now under growing pressure to counteract the dark clouds surrounding the economy.
The opposition have attacked his lack of action on the economy and have told him to "stop sitting on his hands" and introduce some actions to help counter the economic collapse. The economic outlook is now in grave with inflation now running at over 5 per cent, unemployment at its highest since 1999, a €600m shortfall in tax returns, plummeting consumer confidence and stubbornly high interest rates.
Latest National House Building Guarantee Registration statistics or registered house starts, broken down county by county, expose how shocking the collapse in building activity has been.
All counties bar one saw massive reductions in house starts with a number of counties seeing almost no activity at all. Overall, during the first three months of this year, the market is down about 75 per cent compared with the same period of 2007. If this continues throughout this year
For the 12 months up to the end of March there were 29,000 house starts, down from over 62,000 the previous year. Of the 29,000, only 4,000 have been in 2008.
Previous predictions of 40,000 house builds from the Construction Federation Industry for this year are now looking to be optimistic, with the final figure now likely to be under 30,000. This is compared to the peak of 93,000 conclusions in 2006 and 75,000 last year.
At worst, since January 1, counties Leitrim, Longford and Monaghan have each seen less than 10 individual house starts. Monaghan has dropped by over 96 per cent compared with 2007. Most worrying is the collapse in the greater Dublin area, with Wicklow reporting only 15 individual house starts since the start of the year, which means a 93 per cent drop. Westmeath has seen a 92 per cent drop resulting in only 24 houses being started this year. Louth saw a 63 per cent fall while Meath is the only county to show an increase -- four extra houses.
Austin Hughes, chief economist with IIB, said that there is no doubt the country is now in a "very difficult" place.
Speaking yesterday, Mr Hughes said: "Housing figures are to remain weak throughout the year. We have seen developers act very quickly and pull the supply from the market which may help the market recover next year. But these figures are stark, and it is clear that it is going to get worse before it gets better."
Mr Hughes himself has revised down his previous estimates for economic growth from 3 per cent to less 1.8 per cent but admitted even that could be optimistic given the added impact of the worsening international economic crisis.
He did say, however, that no matter how painful the fall is at present in terms of job losses and revenue shortfalls, it is still a welcome adjustment.
The opposition however, squarely laid the blame for the crisis at the door of Mr Cowen. Fine Gael's Richard Bruton has described the current state of the economy as "deeply worrying" and has called on Mr Cowen to stop "sitting on his hands" and implement an action plan to counter the rot.
Mr Bruton said that 10,000 house-builds represents about €1bn in terms of government revenue and that such shocking drops in the housing sector is clearly dragging the rest of the economy down with it.
Speaking yesterday to the Sunday Independent, he said: "We are now at a cusp and Cowen has to act, he can't sit on his hands anymore. The most optimistic outlooks for growth are now looking unlikely and remember we have a government committed to a massive increase in public spending. Tough times are certainly ahead."
Mr Bruton added: "Most commentators on the economy have identified several measures that would help counter the continuing downward spiral but they have been met by little or no action from Cowen or his department."
This bad news comes days after the latest Daft.ie report which said that house prices have continued to plummet amid very limited activity in the market due to the credit squeeze and reduced consumer confidence.
Ronan Lyons, of Daft.ie said: "With huge numbers of property for sale in many parts of the country, sellers are now finding they have to reduce the asking price in order to attract interest from buyers."
Also out last week was a damning IMF report which said Ireland's growth is set to plummet from last year's 5.3 per cent to less than 2 per cent.
The IMF warned that the tighter credit conditions will impact on house prices in several European countries. including Ireland.
Daniel McConnell, Irish Independent, 13 April 2008
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