Joe McHugh (Donegal North East, Fine Gael)
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Question 79: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her views on whether the economy here is competitive; and if she will make a statement on the matter. [19945/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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Competitiveness has a number of dimensions and is a very broad policy area.

The National Competitiveness Council Annual Report for 2008 (published January 2009) Volume 1 – Benchmarking Ireland's Progress – gives an overview of Ireland's competitiveness compared to a wide range of competing economies using over 140 indicators taken from a number of competitiveness monitoring sources. While clearly there are areas where we need to improve our position, there are many areas where Ireland performs strongly in relation to our competitors, such as business investment in enterprise, exports, the percentage of firms engaged in innovative activity, quality of life and levels of educational attainment.

The most objective indicator of a competitive economy is the rate of investment by the FDI sector in our country. Last year despite the global turmoil, 2008 saw Ireland win a total of 130 foreign direct investment projects (60% of which will be located outside of Dublin), worth circa €2 billion and also saw the creation of over 8,800 new jobs during the year. The IBM Global Location Trends Annual Report 2008 in October 2008, ranks Ireland as one of the top performers at 3rd place for attracting R&D investment. The Lisbon Council's "European Jobs and Growth" Monitor ranks Ireland the 2nd most competitive economy in Europe for 2008. Educational attainment in Ireland has increased significantly in recent years and Ireland is also making substantial progress in strengthening its research and development capabilities. We also have a substantial and sustained focus on our targeted capital investment programme.

However, it is accepted that Ireland in common with other countries is facing the most challenging set of economic circumstances in a generation. Because of this we are taking exceptional measures to shore up our economy for the benefit of enterprise and jobs.

Our immediate policy objectives with regard to competitiveness are to restore confidence and stability in our economy, provide supports to the enterprise sector, restore cost competitiveness, safeguard the significant achievements of recent years and ensure a return to sustainable export growth. Under the Framework for Economic Renewal we are taking a number of measures across Government to address these objectives. At this time I think it is also important to point out that Ireland made significant progress over the past decade in transforming our economy and building fundamental strengths, and so we enter this period of uncertainty from a strong base.

To help business cope with the current difficulties we have taken determined action to address the fundamental issue of access to finance for business, by way of the new code of practice for banks linked to the re-capitalisation scheme.

Cost competitiveness is also a particular focus of action. Already there are indicators in our favour with inflation, commodity and other prices falling. The Consumer Price Index figures released last week are an indication of falling Irish prices in a number of areas, with Ireland showing the highest cut in prices. This brings Ireland closer in line with average EU prices, going some way towards restoring our overall cost competitiveness, but there is still a distance to go. Price reductions of 10% and 12% respectively in electricity and gas implemented on May 1st will result in further savings for businesses, particularly in the SME sector.

We are committed to maintain low business taxes and a favourable regulatory environment, and will ensure that our policies keep pace with the way business is changing.

Ireland has a track record of adaptability and flexibility. We have made significant strides in the development of a modern 21st Century infrastructure whilst also positioning ourselves for the next stage of development as a knowledge economy. Implementation of the actions included in the Smart Economy framework will continue to enhance and improve our competitiveness in this respect, so that we are well positioned to take advantage of the global upturn.