BEC tells McCreevy budget restraint needed to restore lost competitiveness

EMPLOYERS’ group IBEC has told Minister for Finance Charlie McCreevy that Ireland needs to regain its competitiveness and that this year’s budget should be not be expansionary.

IBEC president Maurice Pratt told Mr McCreevy at a meeting yesterday that the budget would be a crucial factor affecting Ireland's economic recovery and he urged the Minister to frame a “holding budget”, focused on the need to regain lost competitiveness.

This implies no tax increases and continued discipline in day-to-day spending.

IBEC also told the minister that the cost of the benchmarking pay agreement for public servants agreement should not be passed onto to Irish businesses.

Last week the Chambers of Commerce of Ireland said that its members might be forced to suspend agreed pay increases to their workers if they had to pay for benchmarking in the form of higher local commercial rates.

IBEC told Mr McCreevy: “Central and local government must manage pay costs just as private businesses do.”

It added that if benchmarking payments implied higher taxes in 2004, then the final tranches should be phased over a longer period. It also reiterated its call for increased productivity and value for money in the delivery of public services.

The employers’ group said that surveys of its members show that non-pay business costs had risen by almost 30% over the past two years.

“Output and employment have suffered as a consequence and any tax increases now would simply add to these losses and prevent recovery.

“Furthermore, the budget must not make it more difficult to achieve the 2% inflation target agreed in Sustaining Progress".

The IBEC delegation welcomed the decision to introduce a new mechanism to accelerate completion of critical infrastructure and encouraged the minister to push ahead with priority investment.