The public finances continue to perform well. In 2018, the General Government balance returned to a surplus for the first time in over a decade – a significant achievement. This followed a number of years of primary budget surpluses. Furthermore, the European Commission have stated that Ireland continues to be compliant with the fiscal rules. For this year and 2020, further surpluses of 0.2 and 0.4 per cent (of GDP) are anticipated.
However, while very substantial progress has been made in recent years, we cannot become complacent. The headline debt ratio continues to improve but it remains flattered by developments in nominal GDP. Partly for these reasons, my officials will shortly publish two related pieces of work on fiscal vulnerabilities and public debt. These reports confirm that more needs to be done to bring the debt burden down to lower levels.
It is imperative that we continue to implement prudent budgetary policy in ‘good times’ so that policy can deliver counter-cyclical support in the event of a downturn. Such policies are also warranted by the unusually elevated set of international risks facing the Irish economy at present, particularly relating to Brexit. The external environment has also weakened in recent months with a less benign economic outlook.
Taking recent fiscal and macroeconomic data together, the overall performance of the economy remains robust, best encapsulated by exceptional labour market data. The unemployment rate is well below 5 per cent (down from 16 per cent in 2012) helped by strong and broad based employment gains, which are transforming income and living standards in Ireland. Significant progress has also been made in recent years in improving Ireland's competitiveness. The 2019 IMD World Competitiveness Yearbook ranked Ireland as the 2nd most competitive country in the EU and the 7th most competitive in the world.