Bernard Durkan (Kildare North, Fine Gael)
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108. To ask the Minister for Finance the extent to which he remains satisfied that the economy remains competitive, facilitates growth and is capable of meeting the challenges ahead including Brexit; if there are particular initiatives that need to be taken; and if he will make a statement on the matter. [30966/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland’s economic recovery has been underpinned by a significant improvement in competitiveness. The latest figures from the Central Bank of Ireland show that Ireland's real harmonised competitiveness indicator, a widely used measure of competitiveness in Europe, has improved by approximately 19 per cent between its peak in 2008 and February 2018.

The restoration of Irish competitiveness since 2008 has been hard-won through productivity improvements and wage and price moderation. It is important that this competitiveness is preserved and continues to facilitate growth. In this regard, the most recent National Competitiveness Council bulletin, which highlights our decline in the 2018 IMD Competitiveness rankings, though remaining the 3rd most competitive economy in the euro area, serves as a reminder that we cannot afford to be complacent. This is all the more important given the significant economic risks we face both internationally and domestically.

On the external side, the impact of Brexit has already been felt through the strengthening of the euro against sterling. Other international risks include the policy stance in the US, including in relation to taxation. In terms of domestic risks to competitiveness, overheating and housing supply pressures are of particular concern. The housing sector can adversely impact on competitiveness through, for example, restricting the mobility of labour.

These risks highlight the importance of maintaining competitiveness-oriented policies, including sustainable fiscal policies, to help address emerging uncertainties and avoid pro-cyclical policy contributing to overheating pressures. With regard to housing, a number of initiatives were introduced in Budget 2018, in addition to the measures implemented in ‘Rebuilding Ireland: An Action Plan for Housing and Homelessness’, to tackle the underlying problem of a supply shortage.

Regarding Brexit, as part of the Government’s trade strategy, Ireland Connected, a number of measures have been set out to specifically address Brexit related issues, including diversification of markets for indigenous exporters. Greater market diversification must be part of the policy response, so that dependence and exposure to the UK market is reduced.

In summary, competitiveness has improved but we must not be complacent. My Department will continue to monitor all relevant developments closely as we seek to ensure that the economy is best placed to weather economic shocks to the greatest extent possible. Competitiveness is an important factor in this.