Micheál Martin (Cork South Central, Fianna Fail)

The figure referred to by the Deputy relates to the NCB purchasing managers services index. It indicates impressive growth in the services sector and healthy demand. The May data from this report signalled the sharpest expansion of new business placed at Irish services firms since September 2000. This report provides further evidence that expansion in the services sector continues to be an important driver of economic and employment growth. Some of the higher costs mentioned in the index are attributable to the very strong growth being experienced in the sector as almost 50% of firms recorded an increase in activity over the previous month.

Recent CSO data show that employment in the financial and other business services sectors increased by 16,300 or 6.4% in the first quarter of 2006. We are now the world's 14th largest exporter of services, a remarkable achievement for a country of just 4 million people. This underlines the competitive strength of our services sector in winning business against strong international competition.

Being one of the world's most open economies has allowed Ireland to prosper for over a decade but also leaves us prone to the pressures of rising external costs. The inflationary impact of escalating energy costs, for example, is a factor every economy is facing.

The Government is playing its part in influencing inflationary trends by implementing responsible fiscal policies, promoting stronger competition and strengthening consumer protection.

I draw the Deputy's attention to the recently concluded social partnership negotiations where, pending formal ratification by the parties involved, it has been decided to reconstitute the anti-inflation group established under Sustaining Progress with the same membership and mandate as before. The parties are also agreed on the critical importance of bringing inflation down as quickly as possible towards levels comparable with our trading partners' performance and towards the eurozone average to secure jobs.

Public policy, both at central and local government level, and the actions of employers and trade unions will be framed with this inflation target in mind and its progressive achievement over the period of this agreement. It has been agreed in this context that trade unions and employers will respect the terms of the pay agreement, having particular regard to the common objectives of improving competitiveness and living standards by bringing inflation under control. The Government, for its part, will seek to minimise the effect of the public service pay agreement on inflation by actively pursuing the agreed modernisation programme to achieve better value for money in public service delivery.

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