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Over reliance on construction sector a threat to economy ­ Ó Caoláin

4 October, 2006

Sinn Fein Finance spokesperson Caoimhghín Ó Caoláin has said that the revelation in a report published today that the Construction sector accounts for 23% of the state's GDP is a cause for concern. Ó Caoláin said the over-reliance on the construction sector is not sustainable and cannot continue indefinitely.

Deputy Ó Caoláin said, "A Gooodbody report published today reveals that the construction sector accounts for 23% of the country's GDP, compared to an average of about 12% in the EU. This over-reliance of the economy on the construction sector should be a matter of serious concern to the Government. The ESRI quarterly report for summer 2006 also warned of the dangers of an over-reliance on construction. A significant proportion of the workforce is now employed in this sector. The exchequer is heavily reliant on the sector for Revenue including revenue from VAT on building materials. Much of this construction is not driven by building houses for those with housing needs -- it is driven by construction for the investment market and many units built remain unoccupied. The construction and property boom has many negative consequences including the fact that property prices mean small businesses are being priced out and replaced with unproductive investment property.

"The over-reliance on the construction sector is not sustainable and cannot continue indefinitely. While the Goodbody report predicts a gradual slowdown over the next year, the slowdown may be far more rapid than that report is predicting. How is the government planning for the consequences of this sector re-adjusting to a situation more in line with the EU average where the construction sector accounts for 12% of GDP? What contingency plans are there to address the consequences of a rapid reduction in the numbers of those employed in the construction sector? Is the Government planning for the eventuality of a sharp contraction in revenue generated as a result of the present boom in the construction sector?" ENDS

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