Caution urged as Republic's global ranking improves
A global ranking highlighting a marked improvement in Ireland's competitiveness shouldn't distract from outstanding problems, the head of the Republic's competitiveness watchdog has warned.
Ireland has surged from 16th place last year to seventh, according to the latest analysis from the Swiss-based IMD World Competitiveness Center.
Ireland is now the most competitive country in the eurozone and the third most in the European Union. The UK is number 18, up one place on last year.
The IMD study takes into consideration a range of factors that include not only the tax environment, but also the health of the economy, regulation, petrol prices and electricity costs. It lists, as improvements on last year, the improvement in GDP and the government finances, finance and banking regulation and credit.
The National Competitiveness Council, headed by UCD economist Professor Peter Clinch, welcomed Ireland's ranking rise. But Prof Clinch sounded a note of caution, saying: "While we should be pleased that Ireland's improving competitiveness is recognised globally, we cannot afford to become complacent about our performance or relax our efforts to drive improvements.
"Amongst all the good news in the IMD figures, a number of urgent challenges are also evident."
The council said issues such as unemployment - particularly youth and long-term unemployment - capital investment and improving access to credit for businesses, especially non-bank finance, must be addressed.
It argued that the Republic's enterprise base needs to be diversified and needs to expand into new markets and sectors.
More needs to be done to tackle the residential property problem, and to maximise the impact of investment in R&D, the council said.
The watchdog urged the Government to maintain vigilance in the public finances, and ensure a pro-business friendly tax regime is in place.
Prof Clinch said the council would be raising these issues in its forthcoming competitiveness scorecard.
In April the council published a damning report highlighting a number of problems that risked derailing Ireland's competitiveness, including the fact that businesses here are paying 80% more for loans than the eurozone average.
It comes as a separate report found that the worsening skills shortage in the construction industry means the cost of building in Dublin is now increasing at the fifth fastest rate in the world.
The survey from construction consultancy Turner & Townsend found that construction costs in Dublin rose 6% in 2015. That was the fifth fastest rate out of 38 regions surveyed, and was ahead of the likes of London, New York, San Francisco and Hong Kong.
The report now categorises the Dublin market as "hot" alongside Kuala Lumpur, London and San Francisco. That is one notch below Turner & Townsend's categorisation of "over heating".