I propose to take Questions Nos. 75 and 78 together.
The recovery in the Irish economy over the last number of years, in part, reflects the improvements in Ireland’s competitiveness. As of February 2018, Ireland’s competitiveness, as measured by the Central Bank’s Harmonised Competitiveness Index, has improved by approximately 19 per cent since 2008. The improvement in Ireland’s competitiveness has also been reflected in our international competitiveness rankings. For example since 2011 Ireland has risen from 24th to 6th on the IMD World Competitiveness Rankings.
The improvement in Ireland’s competitiveness reflects a moderation in both wages and prices, along with substantial productivity gains in our economy. However we cannot take this progress for granted, particularly given the challenges which the economy is likely to face in the coming years.
In particular, the Irish economy is particularly exposed to the UK’s decision to leave the EU. The immediate short run impact of this has been a loss of competitiveness, vis-à-vis the UK, as a result of the depreciation in sterling. Over the long run, any barrier to trade will impact on Irish growth. In addition to the impact of Brexit, potential changes in the international tax landscape, the risk of disruption to world trade and rising geopolitical tensions all have the potential to negatively impact the economic outlook over the coming years.
Given these challenges we need to build upon the progress we have already made, managing our public finances in a prudent manner and maintaining competitiveness-oriented policies so that the Irish economy is in the best possible position to weather any shocks that may emerge.