The return of the boom in 2004 is claimed to be primarily the result of the large construction sector catching up with the demand caused by the first boom. The construction sector represented nearly 12% of GDP and a large proportion of employment among young, unskilled men. A number of sources, including The Economist, warned of excessive Irish property values. 2004 saw the construction of 80,000 new homes, compared to the United Kingdom's 160,000 – a nation that has 15 times Ireland's population. It is estimated that home completions in 2006 may have reached 90,000.
In January 2009 UCD economist Morgan Kelly predicted that house prices would fall by 80 per cent from peak to trough in real terms.
Loss of competitiveness
Rising wages, inflation and excessive public spending[dubious – discuss] led to a loss of competitiveness in the Irish economy. Irish wages are now substantially above the EU average, particularly in the Dublin region, though many poorer Eastern European states have joined the EU since 2004 which has made the average EU wage substantially lower than it was in 1995. Low-paid sectors such as retail and hospitality remained below the EU-15 average however. The pressures primarily affect unskilled, semi-skilled, and manufacturing jobs. Outsourcing of professional jobs is also increasing, with Poland in 2008 gaining several hundred former Irish jobs from the accountancy division of Philips and Dell.
Promotion of indigenous industry
One of the major challenges facing Ireland is the successful promotion of indigenous industry. Although Ireland boasts a few large international companies, such as AIB, CRH, Kerry Group, Smurfit Kappa Group, Elan and Ryanair, there are few companies with over one billion euros in annual revenue. The government has charged Enterprise Ireland with the task of boosting Ireland's indigenous industry. The government launched a Web site in 2003 with the objective of streamlining and marketing the process of starting a business in Ireland.
Reliance on foreign energy sources
Ireland relies on imported fossil fuels for over 80% of its energy. Ireland for many years in the middle twentieth century limited its dependence on external energy sources by developing its peat
bogs, building various hydroelectric projects including a dam at Ardnacrusha on the River Shannon in 1928, and developing offshore gas fields and diversifying into coal in the 1970s. Gas, peat and hydroelectric power have been almost fully exploited in Ireland. This situation has led to a continuously increasing need for fossil fuels at a time of increasing concerns about security of supply and global warming. One solution is to develop alternative energy sources including wind power and, to a lesser extent, wave power. Wind however is not a panacea as it needs to have conventional plants to augment it. An offshore wind farm is currently under construction off the east coast near Arklow, and many remote locations in the west show potential for wind farm development. A report by Sustainable Energy Ireland indicated that if wind power were properly developed, Ireland could one day be exporting excess wind power if the natural difficulties of integrating wind power into the national grid are solved. Wind power by November 2009 already accounted for 15.4% of total installed generating capacity in the state. By 2020 the Irish government forecasts that 40% of the country's energy needs will come from renewable sources, well above the EU average.
Distribution of wealth
Ireland's new wealth is not evenly distributed. The United Nations reported in 2004 that Ireland was second only to the United States in inequality among Western nations. There is some opposition to the theory that Ireland's wealth has been unusually unevenly distributed, among them economist and journalist David McWilliams. He cites Eurostat figures which indicate that Ireland is just above average in terms equality by one type of measurement. However, while it is better off by this measurement than generally less developed and/or more free market countries like Britain, the Mediterranean and the new accession states, Ireland is still more unequal than the Scandinavan countries, Germany and France.
Moreover, Ireland's inequality persists by other measurements. According to an ESRI report published in December 2006 is the 22nd best out of the 26 richest countries in terms of the level of its child poverty; and the 2nd most unequal country in Europe.