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Economic Competitiveness

Dáil Éireann Debate, Thursday - 28 February 2013

Thursday, 28 February 2013

Questions (96, 97)

Bernard Durkan

Question:

96. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the competitiveness of the economy has improved when compared with other EU economies; and if he will make a statement on the matter. [10921/13]

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Bernard Durkan

Question:

97. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the competitiveness of the Irish economy continues to maintain its position with our major trading partners with particular reference to the effect of currency fluctuation; and if he will make a statement on the matter. [10922/13]

View answer

Written answers

I propose to take Questions Nos. 96 and 97 together.

Substantial progress has been made in terms of improving our competitiveness. Relatively lower price inflation in recent years means that Irish price levels have fallen relative to our major trading partners. For instance, in 2012 HICP inflation for Ireland was 2.0 per cent, lower than the euro area average of 2.5 per cent. This trend looks set to continue into this year, with HICP for January at 1.5 per cent in Ireland compared with a rate of 2.0 per cent for the euro area as a whole. Indeed Ireland’s HICP inflation rate has now been below or on par with the euro area average for every month since May 2008.

At the same time there has been a significant improvement in economy-wide cost competitiveness. Indeed, the European Commission recently forecast that our nominal unit labour costs will improve by 23 per cent relative to those in the euro area over the period 2008 - 2014. The recent appreciation of the exchange rate against both sterling and the dollar is unhelpful. However, it must be seen in the context of the relative improvement in prices and costs - in other words, variables that we can exert some influence over.

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