The Government will take steps to tackle the declining rate of productivity growth in the economy, Minister for Finance Brian Cowen said today.
"Over the next six months we will be announcing various initiatives which fit within the overall framework of securing and growing our economic success in the years ahead," Mr Cowen told delegates at Fianna Fail economic conference in Galway.
"A major part of that will be measures to increase the productive capacity of our economy," he added, later saying the details of any reforms would be announced in his December budget.
Mr Cowen said he not believe that a major downturn in the economy was inevitable.
"There are warning signs we have to address and, as I said, we can never allow ourselves to be complacent but equally there is no basis for talking down our prospects."
"Every country's economy faces warnings, but not every country is willing to tackle them," he said.
Last week Central Bank Governor John Hurley called for "every effort" to be made to avoid a further erosion of Ireland's competitiveness given rising costs for companies in Ireland, where the annual rate of consumer price inflation is currently running at close to 4 per cent.
Mr Cowen said that, beyond external factors such as rising euro zone interest rates and high oil prices, the government would do "everything else that we possibly can to ensure that inflationary pressures do not become a constant in our economy".
That would involve a "responsible budgetary strategy going forward", despite what one delegate called the rude health of public finances and what many expect to be a giveaway budget ahead of next year's election.
While acknowledging current tensions in the Middle East and uncertainty over the future of oil prices, Mr Cowen also said he expected inflation to moderate in the latter part of the year. "We expect that by the end of the year, if nothing else changes, annualised inflation should come down."
He declined to give a precise forecast. Today's conference was aimed at wooing small and medium-sized businesses who have repeatedly called on Government to tackle the rising cost of operating in Ireland and criticised a national wage deal earlier this year as too generous.
"We've put a reasonable wage deal in place and it will help in improving international competitiveness," Mr Cowen told party members, adding that increased competition in the country's services sector was also needed to help keep a lid on prices.
Mr Cowen said he also believed that recent legislative changes to allow below-cost selling by retailers would eventually have a moderating effect on inflation.