Bernard Durkan (Kildare North, Fine Gael)
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Question 312: To ask the Minister for Finance the steps taken by him to combat any emerging trends that emerge from time to time which might have the effect of impeding the competitiveness of this economy with particular reference to ensure that this Country can compete with all others within the EU in the first instance and throughout the worldwide economy; and if he will make a statement on the matter. [1666/11]

Bernard Durkan (Kildare North, Fine Gael)
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Question 315: To ask the Minister for Finance the extent he has compared the competitiveness of this economy with others within the eurozone; the issues that have arisen; the actions taken or likely to be taken arising therefrom; and if he will make a statement on the matter. [1669/11]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 312 and 315 together.

The standardised methodology for monitoring relative competitiveness across the euro area is the Harmonised Competitiveness Indicator (HCI). While it cannot be denied that Ireland had its competitive edge eroded relative to our European peers, as a country we are regaining this competitiveness. Since mid-2008, the Harmonised Competitiveness Indicator for Ireland, as measured by the Central Bank of Ireland, has been falling more or less constantly, indicating an improvement in our international competitiveness. This improvement comes despite the renewed appreciation of the euro against the dollar and sterling in the wake on quantitative easing measures in both the US and UK.

Ireland, as a member of a currency union, must focus on improving competitiveness at home. In this regard, we are seeing the benefits of our labour market flexibility: much available evidence points to recent downward pressure on wages in the economy, for example. average weekly earnings were down 1.4% in the year to Q3 2010. Furthermore, unit labour costs – wages adjusted for productivity – are forecast by the European Commission to fall in Ireland next year. In addition, Ireland has had the biggest decline in consumer prices of the euro area which has had a considerable positive impact on our competitiveness.

While the falls in domestic prices, easing wage pressures and improvements in productivity are helpful, we must not be complacent as further improvements in our competitiveness are essential to take advantage of the global recovery. To this end, the National Recovery Plan outlined a programme of structural reforms which will help to further restore competitiveness and support economic growth.