IRELAND’S LOW corporation taxes will not be increased, Minister for Health Mary Harney has said, while she pointed out that the country is becoming competitive again because wages are falling.

Speaking to a Trinity College Dublin event in London, the Minister said she wanted to offer “a well-grounded and reasoned confidence and hope” about Ireland’s prospects.

“We will certainly not increase the cost of corporation tax in Ireland – the 12.5 per cent rate is here to stay. It is an embedded part of the business environment in Ireland; as embedded as the soil and sun in France that produces superb wine; the centuries-old tradition of excellent design and style in Italy; and the Mittelstand engineering tradition in Germany,” she said.

Ireland had let labour costs get too high, she said: “We did let them get uncompetitive, but the direction is good now – we are getting more competitive.

“Ireland is the only country in the euro area in which unit labour costs are falling – last year there was an improvement of nearly 7 per cent in those costs relative to the euro area,” she said.

Discounting the pessimism held abroad about Ireland, she said Ireland is a €160 billion-a-year economy that had once headed €190 billion “but that was built on an excessive amount of construction”.

“We’ve had a permanent contraction. Still, a €160 billion economy from four million people is significant, and by any standards, is among the wealthiest in the world.

“This economy is not about to disappear,” she said.