No room for complacency on recovery, says National Competitiveness Council

Favourable exchange rates, low interest rates and low oil prices have done much to boost the economy and the recovery shouldn’t be taken for granted, the Government’s own major policy adviser said yesterday.

In its end of year scorecard, The National Competitiveness Council detailed “significant achievements” the country has made in recent years in consolidating the strong economic recovery.

However, it said the Government could not rest on its laurels.

“Improved competitiveness has been central to the recovery.

"Reforms have helped to make work pay, improved access to finance for SMEs, streamlined regulatory processes and reduced administrative burdens, said council chairman Peter Clinch.

“However, despite these welcome policy developments, the benign external environment has shielded us from some harsh truths: Ireland’s continuing competitiveness is under threat, and there are indications that pressures are already emerging which are undermining our ability to compete internationally,” said professor Clinch.

He urged the country to “continue to deliver aggressively the structural reforms required to support this growth, and improve competitiveness and productivity.”

The recommendations include:

• The country to maintain a sound budgetary position and at the same time to invest in capital infrastructure to enhance competitiveness and support enterprise, including in broadband and transport across the regions.
• Promoting what it describes as “a cadre of Irish firms of sufficient scale and capability” to grow and be able to take on world markets. It also called on more money for enterprise development agencies.
• Boosting the “the attractiveness” of the personal tax system to attract high-skilled individuals.
• Increasing the number of affordable homes because shortages make Ireland a less attractive location for potential migrants.
• Addressing skills shortages and helping lower still-high unemployment rate by prioritising the new National Skills Strategy.

“While growth prospects for the Irish economy are strong, we must continue to deliver aggressively the structural reforms required to support this growth, and improve competitiveness and productivity,” said Prof Clinch.

“Any loss of competitiveness will have a major negative impact upon both our economic prosperity, employment and our standard of living.

“The council is concerned that, as growth gathers pace, the sustainability of Ireland’s recovery will come under threat as competitiveness pressures are returning.

"There is no room for complacency. Maintaining our strong international competitiveness requires constant improvement across a broad range of policy spheres,” he said.