Banks, lawyers and wages driving up costs of business

Banks and lawyers are driving up the costs of businesses, while wages are beginning to rise rapidly, experts warn in a report published on Thursday.

The National Competitiveness Council, which monitors the cost of doing business in the Republic, highlights key price pressures for enterprise in its 2019 report.

Launching the report, the council's chairman, Prof Peter Clinch, said there were a number of hidden threats to cost competitiveness here even with Brexit continuing to loom on the horizon.

"Interest rates – 3.3 per cent – in Ireland are considerably higher than rates in the euro area – 2 per cent – meaning that an Irish business looking to borrow money to future-proof its operations faces costs that are on average 65 per cent higher than their EU counterparts."

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He also pointed out that the prices businesses pay professionals such as lawyers and accountants, and services including human resources and warehousing, were increasing at the fourth-fastest rate in Europe.

The council’s report also highlights that labour costs are rising quickly after a period of staying relatively flat.

“After years of moderate growth in 2018, labour costs increased by 2.9 per cent, four times faster than consumer prices,” Prof Clinch said. “Without similar increases in labour productivity, this increase in costs will simply put pressure on Irish prices.”