Ireland is in the top four most competitive countries in the EU with Germany, Netherlands and Denmark, but overcautious banks, slow to lend to smaller enterprises, are retarding growth.
The EU’s competitiveness report will help guide the European Commission when it issues advice to the government on the country’s economy and on its Budget for next year.
Ireland ranks best in the EU, and sixth in the world, for ease of paying taxes, but its reputation for enforcing contracts is poor, ranking 63rd in the world. The legal process takes too long and despite huge pressure from the troika in the past few years, remains relatively expensive, the report notes.
“These high legal costs have an impact on the economy as a whole and they affect the cost structure of all business, particularly SMEs”, it says.
According to the World Bank Doing Business report last year, 21 procedures they investigated took almost two years to process and cost more than a quarter of the value of what was being claimed.
While the Legal Services Regulation Bill is making its way through the Oireachtas to establish independent regulation of the legal professions and improve access and transparency of legal costs, more judges and support staff are needed to bring the number close to the EU average.
Ireland has one of the most favourable business and entrepreneurial environments in Europe partly due to public administration, much more needs to be done, especially in making it easier for SMEs to tender for state contracts.
An assessment of energy intensity and CO2 intensity found Ireland is the top performer in the EU, but this is largely because so much of its GDP comes from services and high value-added manufacturing.
However, energy inefficient building stock, fossil fuel-based electricity generation, greenhouse gas emissions — especially from its cattle herd — and a greater dependency on private cars rather than public transport pose challenges.
Exports of environmental goods are half the EU average although nearly 20,000 people are employed in manufacturing for the green economy. Sustainable energy could support at least 30,000 jobs within the next six years, reducing energy costs.
The report says that raw materials policies are particularly important for Ireland not just because of security of supply but because the country has significant mineral resources including two of the richest high-grade zinc mines in the world that account for a third of the EU’s zinc concentrate production, while Alumina is the EU’s largest bauxite processing plant.
While a well-educated, flexible workforce has always been one of Ireland’s strengths, there are still too many early school-leavers and increasing skills mismatches, the report said.
It noted developments to improve these and reform the further education and training system, and to bridge the gap between training and employment.
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