Price competitiveness ‘can be overstressed’

TAOISEACH Bertie Ahern was upbeat when he addressed the IMI conference yesterday in Druids Glen.

In a wide-ranging review, Mr Ahern noted that sceptics about the economy had been proved wrong.

"Our critics at home and abroad, felt the game was up, the Tiger had been tamed."

That was particularly true following a succession of disasters from the stock market crash of 2002 to 9/11 with foot and mouth disease thrown in for good measure, he said.

But the economy stood the test and "just as before, we have the capacity to surprise the world and ourselves, by what we can achieve."

Critically, unemployment stayed low during that period of uncertainty, incomes continued to grow and critical public spending programmes were protected, he said.

Uncertainties still remain "particularly as a result of high international oil prices, but we have today many reasons to be optimistic for the future," he said.

Looking ahead, he said employment opportunity "is the key to social development."

To ensure we sustain the kind of growth several needs to be done including sustaining investment in infrastructure, he said.

Mr Ahern, who arrived at the Marriott Hotel, Druids Glen, by helicopter, said the 10-year investment envelope for transport "will not be aspirational." It will set out in detail the projects that will be delivered on over the period and will involve an achievable and pragmatic vision," he said. Despite the huge success that has seen the economy ranked among the very top in the world, we have to guard against complacency, he warned.

Mr Ahern warned also of the dangers of overstressing competitiveness in the context of staying ahead in terms of economic performance.

Paul Krugman, the well-known US economist, once described price competitiveness as a "dangerous obsession," he said.

To the IBEC element in the audience Mr Ahern's comments may have come as a bit of a shock. The Taoiseach said the economist was right. "Over the medium-term countries compete, not on price, but on innovation."

That does not mean taking our eye off the ball on wages and prices. These have to be kept under control, but capital infrastructure and skills will ultimately dictate our place in the future global economy, he said.