asked the Minister for Industry and Commerce if he will make a statement on the impact of current interest rates on the competitiveness of Irish exports.
Written Answers. - Irish Exports.
40.
Limerick East): I would refer the Deputy to the reply given to a similar question by Deputy Flynn (Official Report, 13 March 1986, Volume 364, columns 1969-70) in which I pointed out, inter alia, that:
(a) The competitive position of Irish exporters in the UK market vis-à-vis those in other EMS countries has not been eroded since the other EMS currencies have also strengthened against sterling.
(b) Not all fluctuations in the exchange rate of currencies outside the EMS are disadvantageous. In addition to considerable benefits reaped from the high value of the dollar the present exchange rate of sterling has enhanced the position of many Irish firms in that imports from the UK such as basic raw materials and capital goods, which are significant, are now cheaper and help to reduce manufacturing costs.
(c) Exchange rate fluctuations are but one of a variety of elements of total costs such as those associated with wages, quality, marketing, delivery and after sales service. Proper business practice requires that the balance of these be constantly reappraised.
As regard the effect on competitiveness of interest rates, I would point out that since the recent EMS realignment, Irish interest rates have fallen sharply. The prime overdraft rate of the associated banks is now 10 per cent, its lowest level in eight years. In real terms, that is after allowing for latest published year on year inflation rate, Irish interest rates compare very favourably with those of our competitors.