The IBEC group representing Irish business has just launched its new report, Ireland as a place to do business, setting out that Ireland is once again becoming a favoured location for foreign direct investment (FDI ), a fact borne out by the IDA's recent mid-year review.
Referring to the major adjustments that have taken place in the Irish economy over the past two years, IBEC also stressed the need for measures to boost the domestic economy while avoiding the risk of a two-speed recovery due to a thriving export sector but sluggish domestic demand.
Key points made in the report refer to the Irish labour force as being among the best educated in the world, and that the World Bank has Ireland in third place in its list for ease of doing business in Europe. The report also outlines that the European Commission forecasts that the fall in Irish unit labour costs will be nine per cent from 2008 to 2011 and includes recent international commentary on positive developments in the economy, highlighting how competitiveness has significantly improved in key areas.
“The adjustments, while painful, were absolutely essential to protect the Irish economy,” said Brendan Butler, IBEC's director of international affairs. “The focus over the past two years on increasing productivity and cutting costs has helped companies restore some of the competitiveness lost in the preceding years. Although there is still some way to go, we have made significant strides. We need to build on this success.”
In relation to boosting activity in the domestic economy, Mr Butler said: “Improving international demand and the weakening of the euro in recent months have provided a positive environment for Ireland’s export sector. The domestic economy, however, remains weak and this must become a priority for Government. Government needs to put in place a well-targeted public capital investment programme and ensure that any changes to the tax system promote consumer confidence and encourage a return to more normal spending and saving patterns. Business is concerned that Government will not meet its targets for public capital investment this year. While current Government expenditure is running marginally ahead of budget, capital investment is a substantial 25 per cent behind target. It is vital that Government remains committed to its own capital investment targets.”