Dan Boyle
Question:15 Mr. Boyle asked the Minister for Finance his views on whether the recently recorded highest ever US trade deficit will have economic consequences here. [2587/05]
View answerTuesday, 1 February 2005
Questions (15, 16)
Dan Boyle
Question:141 Mr. Boyle asked the Minister for Finance his views on whether the recently recorded highest ever US trade deficit is likely to have economic consequences here. [2790/05]
View answerWritten answers
I propose to take Questions Nos. 15 and 141 together.
On budget day I highlighted the evolution of the US current account deficit as one of the main risks facing the Irish economy. The main channel through which the US trade-current account position affects the Irish economy is through potential movements in the euro-dollar exchange rate. At present, this bilateral rate is at €1 equals $1.30, 4% higher than the average for 2004. An appreciation of the exchange rate reduces the competitiveness of the economy.
However, we have no control over exchange rate developments. In this context we must seek to ensure that wages and prices evolve in a manner which protects competitiveness. This is the best way to protect jobs. The need to maintain and improve competitiveness was one of the main reasons I chose not to increase indirect taxes in the budget.