Bernard J. Durkan
Question:149 Mr. Durkan asked the Minister for Finance the position of Ireland in the European competitive stakes as an investment location; and if he will make a statement on the matter. [14961/03]
Written Answers. - International Competitiveness.
While Ireland's ranking in the World Competitiveness Yearbook has fallen to 11th position this year from ninth in 2002, I am confident we remain well placed to maintain our position as an attractive investment location for overseas investors. The reformed taxation system will continue to attract the inward investment which has proved so vital to our economic growth. Our work force is highly skilled and we are continuing to invest significantly in our education system to ensure that this remains the case. Infrastructural development also continues to be prioritised. Securing the competitiveness which has been so instrumental to our economic development, and thereby safeguarding jobs, is of key importance for this Government.
Bringing our inflation rate down to that prevailing in our major trading partners as soon as possible is essential in this regard. The recent strengthening of the euro and its negative impact on our competitiveness has increased the urgency of this. That is why the Government made the commitment in Sustaining Progress to work together with the social partners to exert downward pressure on inflation. The anti-inflation initiative is part of this process and the Government agreed that proposals for action would be co-ordinated by a specially convened group. I look forward to the anti-inflation initiative group's report which is due by the end of the summer. I am confident that, working together in partnership, we will address the issue of domestic price pressures in the Irish economy to bring inflation down. In this context, the implementation of the moderate pay arrangements set out under Sustaining Progress is also vital. Keeping public expenditure on target will be important if our inflation rate is to moderate and I have put in place management and control mechanisms to this end.
Bernard J. Durkan
Question:150 Mr. Durkan asked the Minister for Finance the extent to which the economy compares with other European locations; and if he will make a statement on the matter. [14962/03]
According to preliminary data recently published by the CSO, real GDP in Ireland last year grew by 6.3%, as opposed to the 1.1% for the European Union 15 as estimated by the EU Commission in its spring forecasts. Even allowing for the fact that GDP overstates domestic activity in Ireland, this is still a strong indication that Ireland's economy outperformed the EU-15 average in 2002. Looking at this year as a whole, the Commission has forecast that real GDP growth in Ireland will be 3.3%, which is ahead of its forecast for real EU-15 growth of 1.3%.
With regard to inflation, in terms of EU comparisons, the appropriate measure of inflation is the harmonised index of consumer prices (HICP). The most recent CSO data show that the rate of Irish HICP inflation in April was 4.6% compared to 2.1% in the euro area. The Commission spring forecast HICP growth of 4.2% in Ireland for this year as a whole, while the EU 15 will average 2.1% over the same period.
Relatively high wage and price inflation pose a risk to the competitiveness of our economy. Competitiveness is a priority for this Government and the anti-inflation initiative contained in the new social partnership agreement will be important in this regard.