Latest news with #VasileiosMadouros
Irish Times
08-07-2025
- Business
- Irish Times
Central Bank ‘surprised' by lack of progress in building homes
The Central Bank has been 'surprised on the downside' by the number of home completions since early last year, and the construction industry will need to increase its workforce by about 30 per cent to hit targets unless productivity improves, the regulator has said. Just 30,330 homes were completed during 2024, while the Programme for Government pledges to deliver more than 300,000 by the end of 2030. There were 5,938 new dwelling completions in the first quarter of this year, which was a rise of 2 per cent on the same three months of 2024, but still low in the context of this year's target of 41,000. Officials from the Central Bank were before the Oireachtas committee on budgetary oversight on Tuesday for scrutiny on its latest quarterly bulletin. The regulator recently revised down the number of homes it expects to be built this year to about 32,500. READ MORE 'That is mainly because of the actual data we've seen,' Vasileios Madouros, deputy governor, monetary and financial stability, told the committee. 'We've been surprised on the downside in terms of completions in 2024 and also the first quarter of 2025.' Mr Madouros said that if current levels of productivity are not improved, the number of people employed in construction will need to grow by 30 per cent to hit Government targets. [ Developers with permission for 57,000 apartments will not need fresh application to change plans in line with new standards Opens in new window ] 'Construction employment at the moment is around 180,000 people, which is a little bit above 6 per cent of total employment,' he said. 'If current levels of productivity were to remain as they are, to meet the new higher housing needs ... we estimate we would need an increase in construction sector employment of about 30 per cent, which is substantial. 'That in itself could be difficult to achieve. We have seen some reallocation of labour within the construction sector to housing. There is probably limited scope to see much more of this reallocation going forward, which is why productivity is so important.' How the wealthy are buying up land to avoid inheritance tax Listen | 22:03 Martin O'Brien, head of the Central Bank's Irish economic analysis division, said Ireland is about 20 per cent below European averages in terms of productivity. 'If we just got to European average levels of productivity in construction, we would get 20 per cent more output for the same level of labour input,' he pointed out. 'There are a number of factors that contribute to that, [such as] greater adaptation of modern methods of construction. 'Construction firms in Ireland also tend to be very small, and it's very hard for small firms generally to innovate and engage in adapting to more modern methods of technology.' He said 'anything that can be done' to incentivise firms to invest in the necessary technology and skills they need to be more productive 'would certainly help us to reach the kind of levels of housing supply that is necessary'.
Irish Examiner
08-07-2025
- Business
- Irish Examiner
'Exceptional' corporate tax receipts could at risk in coming years, Central Bank warns
Ireland's "rapidly" growing economy and "exceptional" corporate tax receipts could be at risk in the coming years, the Central Bank of Ireland has warned, with external developments leading the Irish economy into a period of heightened uncertainty. Speaking at the Oireachtas Budgetary Oversight Committee on Tuesday, Deputy Governor of the Central Bank Vasileios Madouros said that while Ireland is in a strong position, underlying vulnerabilities need to be managed carefully. "The exceptional growth in corporation tax receipts since 2015 and the strong pace of economic expansion in recent years have resulted in a marked increase in government revenues," said Mr Madouros. "As a result, even with the substantial rise in government spending and some tax cuts, the headline budget balance has run substantial surpluses in recent years. "However, external developments mean that this benign combination of factors – namely, a rapidly growing economy and exceptional corporate tax receipts – could be at risk in the coming years." The deputy governor added that risks to Ireland's fiscal position from lower corporate taxes and other multinational-dependent taxes have increased, given recent international developments. This is compounded by the "persistent deficit" in Ireland's budget balance once estimated excess corporate tax is excluded. Infrastructure deficits Mr Madouros also highlighted deficits in infrastructure, which he said have become an increasingly significant factor constraining the supply side of the economy. "Addressing infrastructure deficits will not only help meet important societal and economic needs today, but also enable our economy to remain competitive amid a shifting geopolitical landscape," the deputy governor said. The Central Bank also urged the Government to prepare for future funding needs, adding that current funds will not be enough on their own to finance the increased expenditure required to meet the needs of an aging population. "Given demographic trends, Ireland is expected to see the largest increase in age-related spending on areas such as pensions, healthcare and long-term care amongst the EU by 2050," said Mr Madouros. "And we know already that the Future Ireland Fund – the establishment of which has been a very positive public policy intervention – will not be sufficient, on its own." The deputy governor said the current environment presents "important trade-offs" for fiscal policy, which he said can be achieved through "careful management" of the public finances. To do this, the Central Bank is urging the Government to commit to a strong fiscal anchor so that rising expenditure does not add excessively to demand. In addition, it is calling for investment to be prioritised, which can be done by broadening the tax base and mitigating the reliance on corporate tax receipts. Finally, the regulator is calling for measures to reduce delays and, therefore, the ultimate costs in the planning and building of infrastructure. "Measures that incentivise scale and investment in new machinery, equipment and technologies in the construction sector can also help enhance productivity and enable more sustainable delivery of housing and infrastructure," said Mr Madouros. "These structural policies can have an outsized impact on strengthening the supply side of the economy, complementing and adding to the effectiveness of additional public investment in infrastructure."
Irish Times
23-05-2025
- Business
- Irish Times
Government advised to ‘anchor' budget policy in face of tariffs shock
The Government must 'anchor' its spending to strengthen Ireland's fiscal position in preparation for what could be a permanent hit to economic output stemming from shifting US trade policies, deputy governor of the Central Bank of Ireland Vasileios Madouros has warned. US imports tariffs and the response from other trading blocs and countries constitute the 'biggest potential shock to trade policy in decades', the official, who oversees financial and monetary stability at the regulator, said on Friday. Even with the US looking to strike deals with countries, tariffs on US imports remain at the highest levels since the 1930s, and about 25 per cent of the Republic's exports to the world's largest economy are in the firing line. This could increase, however, if the Trump administration adds pharmaceutical products to its tariffs regime or if the ongoing 90-day pause in new tariffs on EU-US trade does not result in an agreement to lower duties, Mr Madouros said in a speech at University College Cork on Friday. READ MORE Unlike the shock of the Covid-19 pandemic, from which the economy recovered relatively quickly, the economist said that any permanent increase in tariffs would 'likely lead to a permanently lower level of output' in the Republic's economy. While the economy is entering this period of uncertainty in a strong position, the Republic's 'underlying vulnerabilities' must be managed carefully, he said. These fragilities within the economy relate to 'fiscal resilience', he said, particularly relating to the exchequer's reliance on corporation tax receipts. More than a third of the State's tax take from businesses, which is heavily reliant on a handful of small multinationals, is being spent, Mr Madouros said. The Government has not only been breaching its own 5 per cent net spending rule but has also been spending 'in excess of what has been budgeted for', he said, exceeding budgetary ceilings. The Coalition must 'anchor' its fiscal policy so it has money to spend when the economy is flagging, rather than adding to economic demand when the wider economy is performing well, Mr Madouros said. 'Broadening the tax base remains important' for the long-term sustainability of the State's finances, he added. The Department of Finance said earlier this month that the domestic economy will experience a significant growth shock with up to 25,000 jobs impacted if the EU fails to secure a trade deal with the US to limit the impact of tariffs.
