Update: Competitiveness of Economy, 25th June 2015

QUESTION NO:   274

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)

by Deputy Bernard J. Durkan

for WRITTEN ANSWER on 23/06/2015  

  To ask the Minister for Finance the extent to which this economy continues to remain competitive, when compared to other competing jurisdictions within and without the European Union; and if he will make a statement on the matter.

REPLY.

  Substantial progress has been made in improving Ireland’s competitiveness in recent years.

There has been a significant improvement in Ireland’s economy-wide cost competitiveness. From the European Commission’s most recent spring forecasts, it can be estimated that nominal unit labour costs in Ireland fell by nearly 8 percent between 2008 and 2014. This compares with an increase of 12 per cent in the UK and 8 per cent in the euro area over the same time period.

In addition, relatively low consumer price inflation over the last number of years has contributed to the improvement in Ireland’s competitiveness because Irish price levels have fallen considerably relative to those of our euro area peers. For instance, annual HICP inflation in Ireland has been below that of the euro area average for every year since 2009.

The gains in Irish competitiveness achieved since 2008 have been hard-won through productivity improvements, wage and price moderation. It is important that this competitiveness is preserved and continues to support growth. In this regard we must be cognisant that favourable exchange rate movements and gains from the fall in oil prices may unwind in the future.   Therefore we need to stay focused on continuing to improve Ireland’s competitiveness through other channels such as wage and productivity improvements.