Cost competitiveness ‘improving’

IRELAND’S cost competitiveness has improved but property and broadband prices as well as legal fees are still too high.

According to a report from the National Competitiveness Council (NCC) on doing business in Ireland costs needs to fall further if Ireland is to continue to attract foreign direct investment.

The report said that while the costs of many goods and services have fallen significantly in Ireland in the past two years, there are some exceptions. The cost of waste water services increased by almost 19% last year and legal services fell very slowly and, at the end of last year, were 18% above the 2006 price.

The costs of public and administered services are continuing to rise, with health and education services increasing rapidly.

Transport costs are also relatively expensive in Ireland compared with the main trading partners, according to the report.

However the country is making strides in some areas and the cost of industrial electricity in Ireland dropped by 24% last year, more than any other benchmarked location.

NCC chair, Dr Don Thornhill, said: “Ireland’s cost competitiveness has improved considerably for a range of key business inputs such as energy, property and a number of business services. This is good news for our exporters and for attracting investment but we must sustain our focus on driving down the cost of doing business here.

“Much of the improvement is due to the sharpness of the recession so it is critical that we act now to put in place the structural changes needed to ensure that costs do not rise again and erode competitiveness when the economy starts to grow.”

The report said that there is evidence that Ireland’s competitiveness continued to improve through the first half of this year and the NCC expects these improvements to show up in the data over the rest of the year.”

Forfás chief executive Martin Shanahan said: “Businesses entering into new contracts in particular are receiving good value.

“We need to continually monitor the cost base and push for further reductions in areas that have not yet adjusted. The lowering cost base will open up new opportunities for Ireland in attracting mobile investment and growing exports.”

The report analyses Ireland’s cost competitiveness performance on labour, property, utilities and business services.

IDA chief Barry O’Leary said competitiveness is a key influencing factor when foreign multinationals are choosing a location for their international operations.

“This report is further evidence that the cost of doing business in Ireland is falling, which in turn is helping to win new foreign direct investment for Ireland and grow exports.”


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