Dáil Éireann Debate, Wednesday - 21 June 2017
144. Deputy Niall Collins asked the Tánaiste and Minister for Jobs, Enterprise and Innovation her views on the way in which the State is now the second most expensive country in the EU for consumer goods and services based on the latest Eurostat data (details supplied). [29153/17]
Amharc ar fhreagraCosts, prices and inflation levels are a key element of Ireland’s international competitiveness. The National Competitiveness Council recently published its annual Costs of Doing Business 2017 report which examines a range of enterprise costs that are largely domestically determined such as labour, property, transport, energy, water, waste, communications, credit, and business services. The Council concluded that while Ireland’s cost base has improved across a range of metrics over the last five years - making Ireland a more attractive location for firms to base their operations in - Ireland remains a relatively high cost location for a number of key business inputs. In the Council's report, Ireland’s current price profile is described as ‘high cost, rising slowly’.
The report from Eurostat referenced also concludes that Ireland is a higher cost location. Ireland, in 2016, was the second most expensive country in Europe for goods and services behind only Denmark and slightly more expensive than both Luxembourg and Sweden. Prices on average here were some 25.6 per cent higher than the EU28 average. For key business inputs, including telecommunications and transport Ireland were 33.6 and 4.3 per cent more expensive than the EU28 average. For education, Irish prices were almost 5 per cent lower than the comparable average.
Recent inflation data, however, reaffirms the NCC’s price profile as high cost yet rising slowly. Annual inflation for 2016 was 0 per cent according to the Central Statistics Office. The overall Consumer Prices Index (CPI) shows that prices on average rose by 0.2% in the year to May 2017. Conversely, on a monthly basis, price actually fell by 0.2% between April and May 2017. Prices, as measured by Eurostat’s Harmonised Index of Consumer Prices (HICP) – decreased slightly in 2016. Irish inflation rates are forecast at 0.7 per cent in 2017 and 1.2 per cent in 2018.The projected path for inflation over the medium term reflects the impact of higher import prices following the depreciation of Sterling over the past year as a result of Britain’s decision to leave the EU.
The aforementioned report of the National Competitiveness Council is a timely reminder of the risks of complacency regarding our cost competitiveness. To protect the gains achieved to date, to sustain economic growth, and to ultimately spread the benefits of economic growth to all, we must continue to enhance all aspects of our cost competitiveness. The policy implications of the Costs of Doing Business report and the associated reforms required to address Ireland’s cost base, will be included in the Council’s annual Competitiveness Challenge report which will be brought to Government and published later this year.
