Domestic economy must become a priority for government action
IBEC has published a new report this week, ‘Ireland as a place to do business’, which sets out the major adjustments that have taken place in the Irish economy over the past two years. These adjustments confirm that Ireland once again is becoming a favoured location for foreign direct investment (FDI), a fact borne out by the IDA’s recent mid-year review. IBEC also stressed the need for measures to boost the domestic economy, to avoid the risk of a two-speed recovery, with a thriving export sector but sluggish domestic demand.
Key points made in the report include:
• The Irish labour force is among the best educated in the world
• Ireland is ranked third in Europe by the World Bank in terms of ease of doing business
• In the 2010 IMD World Competitiveness Yearbook, Ireland was ranked fourth in the world in terms of availability of skilled labour and openness to new idea
• The European Commission forecasts that the cumulative fall in Irish unit labour costs will be 9% in the period 2008-2011
• Ireland’s decisive and credible action in curbing its deficit and the flexible reaction of the labour market have been recognised by international markets
The report includes recent international commentary on positive developments in the economy and highlights how competitiveness has significantly improved in key areas.
IBEC’s Director of International Affairs Brendan Butler said: “The adjustments, while painful, were absolutely essential to protect the Irish economy. The focus over the past two years on increasing productivity and cutting costs has helped companies restore some of the competitiveness lost in the preceding years. Although there is still some way to go, we have made significant strides. We need to build on this success.
Speaking about the need to boost activity in the domestic economy, Mr Butler said: “Improving international demand and the weakening of the euro in recent months have provided positive environment for Ireland’s export sector. The domestic economy, however, remains weak and this must become a priority for Government.
“Government needs to put in place a well-targeted public capital investment programme and ensure that any changes to the tax system promote consumer confidence and encourage a return to more normal spending and saving patterns. Business is concerned that Government will not meet its targets for public capital investment this year. While current government expenditure is running marginally ahead of budget, capital investment is a substantial 25% behind target. It is vital that Government remains committed to its own capital investment targets.”
