Dáil Éireann Debate, Wednesday - 5 July 2017
26. Deputy Bernard J. Durkan asked the Minister for Finance if he has satisfied himself regarding the competitiveness of the economy; the extent to which potential threats have emerged or are likely to so do; and if he will make a statement on the matter. [31446/17]
View answerIreland’s economic recovery has been underpinned by a significant improvement in competitiveness. The latest figures from the Central Bank of Ireland show that Ireland's real harmonised competitiveness indicator, a widely used measure of competitiveness in Europe, has improved by approximately 20 per cent between its peak in 2008 and May 2017. Progress can also be seen in our improved international rankings. For example, Ireland ranks 6th in the IMD World Competitiveness Rankings. This compares to a ranking of 24th at the height of the crisis in 2011.
The restoration of Irish competitiveness since 2008 has been hard-won through productivity improvements and wage and price moderation. It is important that this competitiveness is preserved and continues to support growth. This is all the more important given the heightened international uncertainty at present. We must ensure that the economy is best placed to weather economic shocks to the greatest extent possible. Competitiveness is an important factor in this.
We must also be cognisant that favourable exchange rate movements can reverse, as we have seen for example in the strengthening of the euro against sterling. Similarly, gains from the fall in oil prices may unwind in the future. In terms of domestic risks to competitiveness, housing supply pressures are of concern. The housing sector can adversely impact on competitiveness through for example, restricting the mobility of labour.
These risks highlight the importance of maintaining competitiveness-oriented policies, including sustainable fiscal policies, to help address emerging uncertainties. It is also important that at firm level, pay moves in line with productivity developments.
In summary, competitiveness has improved but we must not be complacent. My Department will continue to monitor all relevant developments closely.
