Ireland 'more attractive' for FDI

Ireland is becoming a more attractive location for foreign direct investment (FDI) due to the economic downturn, a new report has found.

The Ibec report said a number of major adjustments in the economy over the past two years has led to the economy once more becoming a "favoured location" for investment.

It cited Ireland's educated labour force and a predicted cumulative fall of 9 per cent in unit labour costs between 2008 and 2011 as key factors in winning over investors.

The World Bank ranks Ireland third in Europe in terms of ease of doing business.

"The adjustments, while painful, were absolutely essential to protect the Irish economy," said Ibec's Director of International Affairs Brendan Butler.

"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."

However, there is a danger that a two-speed recovery could occur, with the domestic economy remaining sluggish as the export sector thrives.

Ibec called for the Government to introduce measures to boost the domestic economy

"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," Mr Butler said.

"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."