Bernard J. Durkan
Question:151 Mr. Durkan asked the Minister for Finance if he has addressed all or any of the factors now deemed to affect the competitiveness of the economy; and if he will make a statement on the matter. [2688/05]
View answerTuesday, 1 February 2005
Questions (152)
Written answers
Various factors affect the competitiveness of the economy. As Minister for Finance, my remit covers the macro-economic factors relating to competitiveness, principally prices and wages. The recent strengthening of the euro and its negative impact on our competitiveness further emphasises the need to keep domestic costs down.
I welcome the downward trend in the rate of consumer price index inflation last year. The 2.2% increase last year was the lowest rate of increase since 1999. My decision not to increase excise rates in the budget will help inflation in 2005. We cannot control the rate of inflation; external factors have much to do with that outcome. We can, however, seek to ensure that our domestic cost base does not add to it. That is why we need sensible income policies and a greater role for competition in the economy. This is how we can best protect jobs and living standards. The consensus approach to wage determination has a crucial role in improving competitiveness, by delivering moderate wage increases. In this context, wage increases must be limited to those negotiated under Sustaining Progress. My Department participates fully in the negotiations of these agreements. Officials from my Department are also participating in the anti-inflation initiative set up as part of Sustaining Progress with a view to examining ways of reducing inflation.
It is also important to maintain spending growth in line with revenue growth, thus keeping the burden of taxation low in order to maximise our economic growth potential. We are maintaining capital expenditure at the current high levels relative to GNP in order to reduce the existing infrastructural deficit.