The economy will contract by 7.5 per cent this year and by 1.5 per cent next year, according to a report on TV3.
The broadcaster claims to have seen a copy of the Government’s pre-Budget estimates which are due to be published on Thursday afternoon. It is understood these estimates were discussed at a Cabinet meeting today.
If correct, the estimates would appear to suggest the Department has become more optimistic about the performance of the company over the course of the year.
Minister for Finance Brian Lenihan forecast an 8 per cent contraction for this year in the supplementary budget in April.
According to the TV3 report, unemployment will average at 13.75 per cent next year, suggesting that jobs losses will continue. Again, this is more optimistic than the estimate of 15.5 per cent provided by the Government in April.
The unemployment rate at the first half of the year stood at 12 per cent, according to the CSO. This has continued to rise with 425,500 signing on the Live Register in September.
The report said the budget deficit will reach 12 per cent of gross domestic product if the Government achieves savings of €4 billion. If it fails to cut spending, the deficit will rise to 14.5 per cent.
This is also slightly less severe than a forecast from the European Commission last week which estimated Ireland’s deficit will rise to 14.7 per cent in 2010, up from 12.5 per cent this year and 7.2 per cent in 2008.