Retail competition will help spur recovery, says EU

THERE must be more competition between retailers to ensure the country’s economy recovers as speedily as possible, the EU has warned.

This comes hot on the heels of two reports from the National Consumer Agency (NCA) showing that food is 30% more expensive and non-food items are 51% dearer than in Britain.

The price differences made doing business in Ireland 5%-6% more expensive, according to Forfas, and this had not changed despite the value of the euro against sterling climbing by one-third over the last 18 months.

NCA chief executive Ann Fitzgerald said they had been looking for explanations from retailers for a long time, but had heard nothing that would explain why Irish consumers are paying so much more.

The EU assessment of the country’s economic and employment policies singled out the need for greater competition between shops to reduce prices for consumers. This was an important way to help the economy adjust to the downturn, and gradually turn around.

The report warns that the Irish economy has become more vulnerable as its competitive position has been gradually eroded and says it must find ways of improving productivity.

It must help develop the so-called smart economy, which produces high-value goods, employing highly-skilled people, and which is less exposed to competition from countries with lower labour costs.

A conference in Brussels organised by Fianna Fáil South MEP Brian Crowley illustrated this point with Intel’s chief Craig Barrett saying they have no immediate plan to cut jobs in Ireland as, unlike Dell, they are more sensitive to capital than to labour costs.

And as the Government struggles to find ways to cut €2 billion off public spending this year, the EU said it must reform pensions and move towards a low carbon economy which would help long-term growth.

The report said the Government should gradually balance the books. Ireland said it will take five years to bring the budget back to within 3% of GDP as demanded by the euro area stability pact.