Ireland’s competitiveness under threat, NCC says

Both external and domestic threats troubling Ireland’s competitiveness

Ireland's competitiveness is under threat from Brexit, trade uncertainty, our high debt levels and the economy's reliance on a small number of export companies, the National Competitiveness Council (NCC) said in a report.

In its annual “benchmarking report”, which assesses the Republic’s economy compared to a range of countries with which we compete, the NCC highlighted concern across a raft of areas.

Global external threats were flagged as particularly concerning although the organisation also took issue with some domestic policies which “threaten the sustainability of the economy”.

Rapid house price inflation, transport congestion, failure to meet our climate obligations and failure to address the funding crisis in higher education were aspects of Government policy all criticised.


“Ireland is on an inevitable path to competitiveness loss placing us in a vulnerable position if the international economic conditions were to worsen,” the NCC said.

“To improve our capacity to absorb and respond to economic shocks, the council believes the Government must continue its efforts to reduce debt and avoid any narrowing of the tax base. Any loosening of the fiscal discipline at this stage would undo much of the progress achieved to date.”

Compared to competitor states, in the areas of cost of residential property, labour, credit, energy and services price, the Republic underperforms.

Additionally, the productivity gap between the most productive firms and lagging firms “remains a challenge”, it said, adding that the availability of talent is a fundamental source of competitive advantage and a key driver of productivity growth.

“As the economy is approaching full employment, creating conditions for increasing participation rates and attracting talent from abroad is vitally important. The availability of affordable high quality child and after school care, and policies encouraging older workers to remain in the labour force longer, could help to address skills shortages and improve Ireland’s attractiveness as a location in which to work and live.”

The council's chair, Prof Peter Clinch, said improving Ireland's competitiveness is key to developing a stable economic model that avoids a boom and bust cycle.

“Ireland’s recent fall from 6th to 12th most competitive economy, as benchmarked by the Institute for Management Development, is a timely reminder that our relative competitiveness is under constant threat.

“The risks to Ireland’s prosperity at this point are increasing and the process of reform and improvement must be intensified if Ireland is to avoid the kind of trajectory that we experienced in the lead up to the last economic crisis,” he said.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business