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IMF upbeat on Irish economy, but issues warning on EU risks logo 09/11/2018 David Chance
IMF chief Christine Lagarde © Provided by Irish Independent IMF chief Christine Lagarde

The economy is expected to grow at a red-hot 7.8pc this year, according to the European Commission, although the pace will slow from next year.

The EC report came on the same day as 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 4pc between 2018-20 and it expected the budget to post a surplus, although it too sounded a note of caution over the State's dependence on tax revenues from a handful of multinational companies and "overspending" on the health sector.

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Figures last week showed the Government's spending rose even faster than income, with a 9.2pc rise to €40.1bn.

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

The report from the IMF, which is headed by Christine Lagarde, was more sobering 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 0.3pc points in 2018 and 0.1 points in 2019 with Germany cut by a whopping 0.6pc 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.


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