The main conclusions from the most recent National Competitiveness Council analysis are summarised below.

Key Findings

• Ireland's improving competitiveness performance over the period 2011-2014 has been central to the recovery in employment and economic growth. The report concludes that the drivers of growth are becoming more balanced. While exports remain the key contributor, consumption, government expenditure and public and private investment are making increasing contributions to overall growth, albeit from low bases.
• Since 2011, Ireland's relative international competitiveness as measured by a range of international indices has improved. Ireland moved from 24th to 15th in 2014 in the IMD's World Competitiveness Yearbook, (but slipped back to 16th this year), and from 29th to 25th in the WEF Global Competitiveness Report. In addition, the World Bank's most recent "Doing Business" report shows Ireland is now ranked 13th out of 189 countries, up two places since 2014.
• While we are continuing to benefit from external factors such as the weak euro, low energy prices and fragile recovery in our key markets, the Council considers the sustainability and security of economic recovery and the objective of sustainable full employment is under serious and imminent threat if we do not redouble our efforts at national level to improve our competitive position relative to other countries.
• In terms of the business environment, Irish income and corporate tax rates remain competitive but international competition is increasing. Conditions for enterprise have improved—evidenced in Ireland's improved performance across a range of metrics, including time to start a new business, property registration requirements, speed of electricity connection and improving access to credit. E-commerce levels are among the highest in Europe. Challenges remain, however, in terms of increasing levels of enterprise start up.
• In terms of physical and knowledge infrastructure, Gross Fixed Capital Expenditure continues to recover and grew by 11% in 2014. However, current levels of investment will be insufficient to meet emerging needs. The scope to improve infrastructure capacity and effectiveness in the medium term must be guided by identifying and prioritising those investments which contribute most to Ireland's competitiveness and addressing enterprise needs and bottlenecks.  
• Ireland's knowledge base represents an important competitiveness strength. The output from formal education of third level and STEM graduates is among the highest in the OECD. Of concern is the high proportion of the labour force with relatively low levels of formal education. At 6.7% the proportion of Ireland's population engaged in lifelong learning is well below the euro area average and far behind Finland's 31%. In addition, levels of investment in R&D as a percentage of GNP remain low.
• Both FDI and indigenous enterprise performance in 2014 was exceptionably strong in terms of export growth, jobs created and new investment. Of particular concern is that the export base (i.e. the range of goods we export) is narrowing and that favourable exchange rates with key trading partners such as the UK and euro area are temporarily boosting competitiveness. This leaves Ireland vulnerable to external demand shocks. Labour productivity and multi factor productivity performance is currently positive and above the OECD average. However, shifts in the composition of employment and the influence of the FDI sector are likely to overstate Ireland's performance. Increasing productivity across all sectors and occupations remains a significant challenge.  
• While there have been some positive developments in terms of energy and telecommunications cost competitiveness, a range of price pressures have emerged with regard to labour, property, insurance and business services costs.
• Employment growth is strong and becoming more balanced from a sectoral and regional perspective. Job vacancy levels are increasing, particularly in professional services categories. While outward migration, long term unemployment and youth unemployment levels are declining, they remain high. High-level skills gaps are becoming more pronounced. Ensuring skills and labour market mismatches do not grow and aligning labour market needs with education and training output remains critical to competitiveness.
• Based on the analysis herein, the Council finds that while Ireland's competitive performance continued to improve in 2014, a number of downside risks persist. In terms of the positive messages emerging, overall economic growth has become more robust and broad-based than previously, resulting in employment growth and a more favourable fiscal balance. The exporting sectors of the economy continue to perform strongly and many of Ireland's traditional strengths (such as our attractive taxation regime, a highly skilled workforce, and generally pro-enterprise regulatory regime) remain in place. On the other hand, factors weakening our competitiveness include Ireland's continued high cost base, our dependence on a narrow range of exporting sectors, a series of labour market challenges (i.e. relating to long term and youth unemployment and labour force participation), debt and credit issues, and relatively weak productivity performance in many sectors of the economy.

If you require a copy of the full report (under embargo) please email: press.office@competitiveness.ie

About the National Competitiveness Council

The National Competitiveness Council reports to the Taoiseach and the Government on key competitiveness issues facing the Irish economy and offers recommendations on policy actions required to enhance Ireland's competitive position.

Each year the NCC publishes three annual reports.

1. The Costs of Doing Business in Ireland report is a requirement under the Action Plan for Jobs benchmarks key business costs and highlights areas where Irish enterprise costs are out of line with key competitors.
2. Ireland's Competitiveness Scorecard provides a comprehensive statistical assessment of Ireland's competitiveness performance.
3. Ireland's Competitiveness Challenge uses this information along with the latest research to outline the main challenges to Ireland's competitiveness and the policy responses required to meet them.

As part of its work, the NCC also publishes an annual Submission to the Action Plan for Jobs and Bulletins on specific competitiveness issues.