Bernard Durkan (Kildare North, Fine Gael)
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Question 83: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her plans to address the ever increasing issue of falling competitiveness in this economy leading to dependency to trade, shop and relocate business outside this jurisdiction; if she has attempted to isolate the main cause or causes of such economic haemorrhage; if she has recommended changes in VAT or other taxation with a view to addressing such issues in some part in early date; and if she will make a statement on the matter. [44459/09]

Mary Coughlan (Donegal South West, Fianna Fail)
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The Government fully recognises the difficulties currently being faced by retailers and other businesses as an inevitable consequence of the current difficult economic climate and the importance of ensuring that we continue to have a viable and successful enterprise sector. It is all the more important in these difficult times that businesses, particularly those with a direct presence in the marketplace, ensure that they present as competitive an offering to the trade and the public as possible.

Over the past few months we have seen significant downward pressure on costs and on prices generally. Both the NCB Manufacturing and Services Purchasing Managers' Indices have shown a sustained and deep period of declining input costs for businesses in Ireland, driven, in part, by lower wage costs.

This is matched by Consumer Price Index returns from the Central Statistics Office, which show that overall prices in Ireland fell by 6.6% in the year to October 2009. This compares with a fall of only 0.8 % in the UK for the same period. At the European level, the EU Harmonised Index of Consumer Prices, which is accepted as the most appropriate measure for community wide price comparisons, shows that in the year to August 2009 there was a fall of 2.4% in prices in Ireland as compared with an increase in prices of 0.6% throughout the EU as a whole.

The above returns clearly show that prices are falling more rapidly in Ireland than in Northern Ireland, the UK and in the EU as a whole. This narrowing in the differential in prices is very much to be welcomed and clearly will help the competitiveness of Irish businesses.

Whilst undoubtedly the single market offers opportunities to Irish consumers to shop anywhere within the European Union, the reality is that the majority of cross border shopping by Irish consumers occurs in Northern Ireland, which is not to be unexpected given our common land border and the current weakness of sterling against the Euro.

The ESRI recently predicted that, with our current control of costs, productivity should grow by over 3 per cent in 2010. Combined with projected wage decreases of 2.5 per cent, this represents a significant improvement in the competitiveness of the Irish economy.

All tax matters, including VAT, are a budgetary matter for the Minister for Finance.