It is time to move "back to basics" and focus on competitiveness in order to achieve continued economic success, the Taoiseach, Mr Ahern, has said.

In a keynote statement of the Government's economic policy, Mr Ahern said high inflation and slower productivity had created "vulnerabilities" in the Republic's economy and "difficult challenges" for the future.

"The basic reality is that, unless we are competitive, in every sense, we will not survive," he said, estimating that the economy was currently growing at less than 2 per cent.

"We have to get our cost and price inflation down to 2 per cent or risk losing jobs and markets. This is the challenge."

Addressing an audience of high-ranking business people at the IMI management conference in Killarney, Mr Ahern said the Government had "a clear strategy" and "a winning formula" that would allow the Republic to retain competitiveness. He said it would be possible to deliver real growth of 3 per cent in the public services with a 5 per cent increase in annual spending, provided that inflation could be reduced to 2 per cent.

"This is what we can do if we successfully align our policies and public expectations to the new reality," said the Taoiseach, emphasising the importance of investment in technological and scientific development, educational attainment and infrastructural development.

Mr Ahern said the Government was particularly committed to "a proper communications infrastructure", warning communications providers that "obstructionist or anti-competitive policies" would not be tolerated in this effort.

He also raised the possibility of making changes to the Constitution to address the cost of building land, an issue that he said was central to "the problem of affordable housing". The Oireachtas All-Party Committee on the Constitution was investigating the matter, he said, adding that it was time that "development enriched the many and not the few".

In conversation with reporters after the address, Mr Ahern said he was happy that housing supply was beginning to meet demand, despite indications in the latest Exchequer returns that the housing market was far outpacing growth in the remainder of the economy.

He said he was "unapologetically" in the business of trying to drive prices down at the lower end of the market.

The Republic would continue to be competitive, the Taoiseach insisted. He acknowledged, however, some manufacturing companies would find it increasingly difficult to compete against cheaper options in locations such as Mexico and India as time passed.

These were the companies pushing redundancy levels higher, he said. Nevertheless, he said he did not foresee a time when manufacturing companies would disappear from the Irish business landscape.

Earlier, Mr Ahern said IDA Ireland was on the point of delivering a number of significant "sustainable" new investments by international companies in the Republic. "We have no reason to be fearful about our success," he claimed.