THE ECONOMY is regaining its competitiveness, according to the annual Costs of Doing Business in Ireland report. Published by the National Competitiveness Council (NCC), the report finds that the sharpening of competitive edge goes some way to reversing the sustained rise in the costs of doing business here over the past decade.

Much of the reversal is a result of the depth of the recession in Ireland. Council chairman Don Thornhill stressed that it “was critical to put in place the structural changes needed to ensure that costs do not rise again when the economy starts to grow”.

A number of factors contributed to the driving down of the overall cost level in 2009.

Industrial electricity costs fell by almost one-quarter on 2008, a far larger decline than in peer countries. Electricity costs for business, however, remain 5 per cent above the EU average.

The council also raises questions about the sustainability of the fall in electricity costs, suggesting that it may have been temporary.

The cost of renting commercial property also declined sharply in 2009, falling by 18 per cent year on year.

However, as rents fell in most other competitor economies, the relative effect was more muted.

According to the report, Ireland in 2009 was the third most-expensive country for industrial rents, down just one place on 2008.

In the private sector, the report highlighted a 19 per cent increase in waste water services in 2009, and noted that legal fees and broadband remain expensive relative to peer countries.

“Public and administered services continue to negatively affect Irish cost competitiveness” the report states, noting the prices of health and education services continue to rise “rapidly”.

Dr Thornhill said the report was “good news for our exporters and for attracting investment, but we must sustain our focus on driving down the cost of doing business here”.

A separate report, published yesterday by the United Nations, showed that Ireland had bucked international trends in attracting foreign direct investment (FDI) in 2009.

While global flows fell sharply, inflows into Ireland rose by more than 50 per cent, according to the United Nations Conference on Trade and Development (Unctad).

This represented more than 5 per cent of total FDI inflows into the EU27, a disproportionately large share given that the Irish economy accounts for less than 1 per cent of the total EU economy.

More important than these headline figures, which can be distorted by flows into and out of Dublin’s International Financial Services Centre, are the number of new foreign investment projects.

According to Unctad, Ireland also went against the international trend in 2009 by this measure, securing 139 projects compared to 126 in 2008. In the first quarter of 2010, 39 projects were secured.