Ireland is “particularly exposed” to the global economic disruption of the coronavirus pandemic, with both households and businesses likely to struggle under existing debt burdens once the recovery begins, according to a major report.
The National Competitiveness Council published Ireland's Competitiveness Scorecard 2020, one of its key annual publications, on Wednesday. The study is focused on the period immediately preceding the Covid-19 crisis.
The report suggests the Irish economy was performing well at the start of 2020 and within the top 20 per cent of countries in the major international competitiveness rankings.
However, it puts forward a number of arguments as to how “long-standing competitiveness weaknesses” must be tackled to mitigate the damage to the economy once the public health crisis has passed.
‘Deteriorate significantly’
The report notes the State entered this “unprecedented economic period” as a “highly-indebted country” in both the public and private sector, adding the fiscal deficit and debt position are likely to “deteriorate significantly” due to Covid-19.
“Households and businesses are likely to struggle under existing debt burdens and it is crucial that appropriate moratoriums can be arranged for financially sound individuals and firms to survive the acute phase of the economic disruption,” it says.
“It is also important that any licensing issues or other regulatory barriers to starting a business are minimised so that enterprises are encouraged to form during the economic recovery in order to meet the demands of new markets.”
‘High-cost economy’
Ireland remains a “high-cost economy”, with Irish prices approximately 14 per cent higher than the EU average. However, inflation in Ireland has increased more slowly than elsewhere in recent times.
Once the recovery begins, the State can prevent unemployment “becoming entrenched and scarring occurring” by reskilling workers and improving digital skills, which lag behind those of some of its key competitors.
With global trade and travel patterns potentially disrupted for some time in the aftermath of Covid-19, the report argues this could negatively impact Ireland’s ability to “attract and recruit agile specialist labour and highly mobile investment”.
The report is also critical of Ireland’s failure to meet its environmental responsibilities, noting greenhouse gas emissions per capita are the highest in the EU, increasing since 2013, at a time when most other countries have been in decline.
Renewable energy accounts for 9.9 per cent of inland energy consumption in Ireland, which compares unfavourably with the EU average (14.6 per cent), and Ireland’s own target (20 per cent).
Ireland also had one of the lowest proportions of fibre broadband connections in the OECD in 2019.
