Bernard Durkan (Kildare North, Fine Gael)
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104. To ask the Minister for Finance the extent to which he remains satisfied regarding the continued competitiveness of the economy; and if he will make a statement on the matter. [17768/16]

Michael Noonan (Limerick City, Fine Gael)
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Substantial progress has been made in improving Ireland's competitiveness in recent years. The latest figures from Eurostat, the statistics arm of the European Commission, estimated that nominal unit labour costs (a widely used measure of competitiveness internationally) in Ireland declined by 4.2 per cent annually in 2015. This is the largest decline across all EU Member States for which data are available.

The decline in unit labour costs in 2015 is a continuation of the trend of significant improvement in Ireland's economy-wide cost competitiveness since 2008 (the peak year for unit labour costs in Ireland). It is estimated that nominal unit labour costs in Ireland fell by 20 percent between 2008 and 2015. This compares with an increase of 9 per cent in the UK and in the euro area over the same period.

In addition, relatively low consumer price inflation in recent years has contributed to the improvement in Ireland's competitiveness as Irish price levels have fallen considerably relative to those of our euro area peers. For instance, annual HICP inflation in Ireland has been below or equal that of the euro area every year since 2008.

The gains in Irish competitiveness achieved since 2008 have been hard-won through productivity improvements and wage and price moderation. It is important that this competitiveness is preserved and continues to support growth. In this regard we must be cognisant that favourable exchange rate movements can reverse, as can be seen for example in the recent strengthening of the euro against sterling. Similarly gains from the fall in oil prices may unwind in the future. This highlights the importance of maintaining competitiveness-oriented policies to help address emerging uncertainties.