According to the EU, Irish wages are expected to increase by 4 to 5% in 2022, well ahead of the last few years, but on the verge of catching up with inflation, according to the EU.
he annual report on the European Commission’s whistleblowing mechanism foresees even higher wage increases for workers in Italy and eight Eastern European states, but warns that this development could have implications for “ cost competitiveness ”because it follows years of previous salary increases.
Prices in Ireland rose 5.1% year-on-year in October, the highest level in boom years, although the average for the year is expected to be between 2% and 3%.
However, Irish food and drink producers have warned consumers here could face even higher prices if the costs of fuel, shipping, packaging and labor work continue to increase.
The Central Bank of Ireland said this week that prices for services – especially rents, restaurants and accommodation – have risen at a faster rate in Ireland than in the rest of the euro area and have been the main contributor to headline inflation in Ireland last month. Energy prices were the main driver of inflation during the year.
In an economic letter, he also warned that the eurozone “faces a persistent risk of inflation exceeding the target” due to supply shortages and wage demands – although he said that a “wage-price spiral” is unlikely.
The European Central Bank insists inflation is temporary, although it may last longer than expected next year.
In its report on Tuesday, the European Commission also found Ireland to be the main driver of the EU’s increased trade surplus in the first half of this year, with pharmaceutical and IT exports experiencing a slump. Covid thumb.
But according to the report, released Wednesday as part of the bloc‘s annual cycle of economic surveillance, Ireland is still experiencing economic “imbalances” linked to high public and private sector debt and the outsized activities of multinationals.
While public debt measured as a percentage of the entire economy remains below the EU’s upper limit of 60% of gross domestic product (GDP), the report states that debt “remains significant” relative to GDP. gross national income (GNI), a better measure of the local economy.
Corporate debt “also remains above fundamental and prudential thresholds” at 153pc of
GDP or 274pc of modified GNI (GNI *).
And although household debt as a percentage of GDP and GNI is below EU alert levels, it is “still high” compared to overall household budgets, at 109 pc of disposable income.
The report also warns of a “sharp overvaluation of house prices” in Ireland, but expresses no fear of a housing bubble.
Overall, the Commission said the 2022 budget is in line with EU rules and the government has been advised to maintain a ‘supportive’ budgetary position.
But there has been a warning for heavily indebted countries like Italy, which have been asked to limit current spending given its high debt level.
“This is particularly important for heavily indebted countries like Italy,” said European Economic Commissioner and former Italian Prime Minister Paolo Gentiloni. “We don’t reject anything. We do not make specific requests.