Ireland, easily the best-performing European economy since the start of the decade, will see gross national product growth of 1.6 per cent this year, the lowest rate since 1988, according to a gloomy report from the country’s leading independent think-tank.

The Economic and Social Research Institute said the slowdown in house-building, lower consumption and a less favourable international climate for exports would hit growth. The ESRI had previously forecast a growth rate of 2.3 per cent for 2008, against the government target at the time of the December budget of 2.8 per cent.