Ireland in recent years has lost competitiveness as our prices have grown ahead of other euro area countries and our wages have increased at rates above that justified by our productivity.
As I said in my recent Budget there is an urgent need to improve the competitiveness of the Irish economy, and in this regard there are already a number of positive developments. Consumer prices in Ireland are now declining at the fastest rate in the euro area and the European Commission now suggest that, uniquely in the euro area, our unit labour costs fell last year when all others rose somewhat. These developments will assist in going some way towards addressing our competitiveness problem.
As a small member of a currency union we have no control over the exchange rates we face so we must focus on improving competitiveness at home. While the falls in domestic prices, easing wage pressures and improvements in productivity are helpful we must not be complacent as further improvements in our competitiveness are essential if we are to position ourselves to benefit as EU and global growth resumes. A highly educated workforce as well as the policies outlined in the Government's Smart Economy document will also help. I want to assure the Deputy that improving the competitiveness of Ireland’s economy is a key priority for this Government.