There is a risk the country’s strong general economic performance is overstating Ireland’s competitiveness, which could be masking weakness in future competitiveness.
In its 2017 Competitiveness Scorecard for the country, the National Competitiveness Council (NCC) also warns the economy faces significant downside threats, including Brexit, a potential shift in trade and taxation policy in the US, and the uncertain nature of global growth.
It also references the potential for slower than projected growth in both the UK and US, making it crucial for the country to address factors within its control.
However, the NCC found Ireland's competitive performance continued to improve over the last year.
The report says economic growth, improved public finances, trade performance and a strong labour market performance have all contributed to the country’s improved international competitiveness.
In its assessment the NCC also said the exporting sectors of the economy continue to perform strongly and many traditional strengths (such as our competitive taxation regime, highly educated, young, labour force, and supportive environment in which to do business) remain.
Chair of the NCC Professor Peter Clinch said "we are at a critical juncture in terms of ensuring the foundations for future competitiveness are in place".
He added: "We face major competiveness challenges in developing the resilience of the enterprise base particularly in light of Brexit, and ensuring the environment in which to do business remains competitive, particularly in terms of costs, skills availability, infrastructure capacity and productivity."
The NCC said policymakers should avoid any narrowing of the tax base and instead ensure the tax system "supports and rewards" employment, enterprise, investment and innovation.
The Council also highlights that developing our infrastructure base, while complying with the EU's fiscal rules, will be a fundamental challenge to enhancing competitiveness.
