Unemployment will fall below 10% next year, ESRI predicts

The number of people out of work in Ireland is to fall below one in 10 for the first time in years, Government-funded researchers have predicted.

The ESRI, a think tank set up to help shape official strategies, also dismissed claims of a new property bubble and forecast house prices will continue to rise for the foreseeable future.

In its latest report on the state of the nation, the institute paints a glowing picture for the economy.

The value of everything we produce – known as gross national product, a key indicator of a country’s economic health and standard of living – is expected to rise more than 3.5% both in 2015 and again in 2016.

The recovery will lead to the number unemployed dipping below 10% next year, say the researchers.

Latest figures show 11.5% of the workforce are jobless, with more than 400,000 people signing on the dole.

The last time less than 10% were out of work was at the end of 2008.

But Dr David Duffy, of the ESRI, warned of a number of threats to economy.

“While the outlook for the economy is positive, the weak growth prospects for the eurozone are a concern,” he said.

“Domestically the particularly low rate of investment, the high rate of unemployment and the weak levels of credit being extended remain as issues to be addressed.”

The think tank also dismissed claims by some observers of a property bubble.

House prices are still undervalued and will continue to rise for years until a significant number of new homes are built, according to the institute’s Dr Kieran McQuinn.

On a separate report on the property market, he warned that cost of living - including house prices – needed to be kept in check if the economy is to continue growing.

“Despite the strong increases in house prices observed of late, particularly in the Dublin area, house prices in the Irish market still appear to be undervalued,” he said.

“At present, there is no sign of a bubble in the domestic market and any recovery occurring at this point is almost a credit-less one.”

Dr McQuinn blamed a lack of new housing as responsible for much of the house price rises.

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