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National Competitiveness Council sees risks for economy

National Competitiveness Council warns of external risks to Irish economy, including Brexit
National Competitiveness Council warns of external risks to Irish economy, including Brexit

The National Competitiveness Council has warned that pressure on property costs here could have adverse consequences for the entire economy.

In its latest "Cost of Doing Business in Ireland" report, the Council said that rising rents and house prices will impact upon wage demands, increase the cost of living and ultimately damage competitiveness.

The Council pointed to a range of external developments that reinforce the need to enhance cost competitiveness at home.

These include from Brexit - and its impact on exporters - to rising energy prices.

Domestic pressures include emerging infrastructure bottlenecks, skills shortages and increasing levels of industrial unrest. 

"Maintaining fiscal sustainability and a broad tax base, supporting structural reform, innovation, and productivity, and growing our enterprise and export base will remain significant immediate challenges," commented Professor Peter Clinch, Chairman of the NCC.

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Professor Clinch said that over the course of the recession, the Irish economy underwent a sharp correction in terms of our cost competitiveness. 

"The recent appreciation of the euro vis-à-vis sterling and the higher international price of oil provides a timely warning about just how vulnerable Irish firms are to external international shocks," he said. 

The NCC chairman said that the appreciation of the euro has placed Irish exporters under increased cost competitiveness pressure. 

"Higher international oil prices exert a significant influence on energy and transport prices. This reinforces the importance of prioritising policies and actions that are within Ireland’s control to enhance cost competitiveness," he added.

New annual figures from Swiss business school IMD earlier this week showed that Ireland climbed to sixth in its world competitive rankings.
 
The survey showed that Ireland continued its upward trajectory in the rankings, rising from seventh in 2016 to register its best placement since 2000. It was ranked 17th just four years ago.

The rankings were topped by Hong Kong, Switzerland and Singapore.