Ireland is now the joint most expensive country in the euro area for consumer goods and services and is among the most expensive for utilities such as waste disposal and electricity, the National Competitiveness Council (NCC) said today.
In its annual report, Competitiveness Challenge,published today, the council advises the Minister for Finance, Mr McCreevy, not to impose further tax increases on the old reliables of alcohol and tobacco or more stealthily on public services in the forthcoming Budget. Only by doing this can Ireland's inflation rate come into line with the euro-area target of 2 per cent, the council claims.
The annual competitiveness report benchmarks Ireland's competitiveness against 15 other advanced countries. The 2003 report ranks Ireland as the the joint most expensive country in the euro area for consumer goods and services, along with Finland.
Ireland ranks as the fourth most expensive country for insurance premiums, third most expensive for landfill costs and third most expensive of nine countries for industrial electricity costs.
According to the NCC's chairman, Mr William Burgess, Ireland's most pressing economic policy objective must be to further slow the growth of prices and costs; otherwise it could be left behind by any global recovery.
According to Competitiveness Challenge,Ireland ranks only 13th out of 16 countries with regard to the intensity of domestic competition .
The NCC considers that Ireland's poor performance on this measure is partly because Ireland, unlike most other EU countries (including the UK, Germany and France), has no civil sanctions for infringements of competition law. This makes it difficult to ensure widespread compliance with competition law enforcement.
According to Competitiveness Challenge,recovering Ireland's cost competitiveness must be the first, but not the sole, priority of the broader economic strategy. Deficits in infrastructure, education, entrepreneurship, research and innovation must also be addressed.
The National Competitiveness Council was established by the Government in May 1997 as part of the Partnership 2000 Agreement. It reports to the Taoiseach on key competitiveness issues for the Irish economy and recommends policy actions required to enhance Ireland's competitive position.