The country’s competitiveness watchdog has warned that Ireland’s economic recovery and the Government’s commitment to reaching full employment are under “serious and imminent threat” amid an increasingly uncertain global outlook.
The National Competitive Council (NCC) warned that some previously favourable global economic conditions are beginning to turn against Ireland’s economy with Brexit exacerbating the risk to Ireland.
While the economy continues to benefit from external factors such as the weak euro, low energy prices and gradual recovery in key export markets, efforts must be “redoubled” at national level to improve competitiveness and stave off the threat to economic recovery.
“The scale of the challenges which confront us have been brought into focus by recent events in the UK. Our long-standing and extensive economic and cultural ties with the UK mean that their decision to leave the EU has significant and direct consequences for Ireland.
“It brings into sharp focus the need for Ireland to maintain and improve our competitiveness performance across a range of areas such as infrastructure, ease of starting a business, talent, tax and innovation. Only a renewed focus on competitiveness will help to insulate us from external shocks and factors beyond our control.
“As the economy recovers, we are now seeing price pressures re-emerging and, at the same time, Brexit has resulted in a reversal of exchange rate trends, meaning Irish exports are now more expensive in the UK,” said NCC chair Professor Peter Clinch.
In its annual benchmarking report, NCC commended the Government on improving the macroeconomic environment through reducing the government deficit, cutting public debt and stabilising the banking system.
While maintaining fiscal discipline remains “essential”, the focus must now shift to supporting economic growth and job creation by addressing microeconomic issues.
One of the key pillars of economic growth must be expanding the export base through innovation.
The council also called for a particular focus on costs in areas such as energy, legal, health and housing.
The overhang of non-performing loans along with the cost and access to working capital also remain a concern while female participation in the workforce must also be encouraged further.
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