Davy downgrades Irish economic forecast

But it is still expected to be the fastest-growing economy in the EU in 2017...

Davy downgrades Irish economic forecast

Photocall Ireland

Financial advisers Davy has downgraded its forecast GDP growth for Ireland this year to 3.7%.

That's down from a previous prediction of 4% - the reduction is due to the impact of Brexit as export and manufacturing businesses are expected to face new challenges as the UK leaves the Union.

The firm believes that the Irish economy expanded by 4.8% last year - that's down from predicted growth of 6%.

Despite this set-back, it still expects Ireland to have the fastest growing economy in the EU.

It predicts that house prices will rise by 8% as the Government's help-to-buy scheme and a change in the Central Bank's rules for mortgage deposits come into effect.

Consumer spending grew by 3.2% in 2016 - and is due to increase by another 3% this year, according to Davy.

Investment growth of 7.4% was recorded in 2016 - and is expected to come to 6.8% in 2017 as the property industry grows and FDI remains strong.

"It remains to be seen how markets will react to the UK invoking Article 50 in early 2017. A sharp depreciation of sterling remains a risk for export competitiveness," the report cautions, noting that it is unclear how the UK's exit from the EU will unfold.

We are expected to learn a lot tomorrow as British PM Theresa May delivers her long-awaited speech outlining how the UK will approach Brexit negotiations.