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Restoring domestic demand

Introduction

The main cause of the unemployment crisis is the lack of consumer confidence and poor domestic demand. New thinking and greater ambition from the Government is required. There are practical steps the Government can take to stimulate the domestic economy, even in the face of constrained public finances. The facts The economy remains two-speed in nature: in the last five years net exports contributed to growth; in the last four years domestic demand subtracted from growth. Since 2007, domestic demand has fallen by 22% in volume and by almost 30% in value. We have moved from a situation where credit funded much of the growth in domestic demand to one where high savings and debt repayment are shrinking activity. Consumers who can spend do not have the confidence to do so. Transactions in the property market have ground to standstill on the expectation of further price falls. At some stage over the coming years more normal levels of spending and saving will emerge. It is neither likely nor desirable for domestic demand to be the primary driver of economic growth, but it is essential that it contributes to growth and employment recovery. The challenge is to ensure that this happens sooner rather than later. IBEC will Set out a range of innovative non-Exchequer funded proposals to Government aimed at stimulating domestic activity Provide improved market intelligence to businesses to help them better understand consumer trends Contribute to public and media debate on the economy to bring balance and perspective to the challenges Ireland faces Work with banks and the wider business community on the perceptions and process around credit availability. Relevant links: [Read IBEC's publication - Action plan for recovery - 50 ideas to drive growth

Read IBEC's publication - Unlocking Domestic Demand

Join the conversation - IBEC LinkedIn Group - Driving Ireland's Recovery

Watch videos from the launch of Driving Ireland's Recovery campaign and associated media coverage on the IBEC You Tube Channel - Driving Ireland's Recovery

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Driving Ireland's Recovery



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