The National Competitiveness Council (NCC) has warned that the rising cost of public liability insurance is adversely impacting competitiveness.
The body also warns that legal services around the enforcement of commercial contracts in Ireland are both expensive and slow.
The findings are contained in the NCC’s latest Competitiveness Challenges report, which focuses on six key topics: digital economy, infrastructure, cost of credit, human capital, legal services cost and public liability insurance costs.
The NCC finds that Ireland is still a competitive economy, but warns that there is room for improvement and complacency cannot creep in.
“As a small, highly-open and concentrated economy, we are particularly vulnerable to external shocks, as we saw clearly in 2008,” said Dr Frances Ruane, Chair of the NCC.
“Consequently, we cannot afford to be complacent about our strong overall performance and must continuously strive for improvement, so that we remain a highly competitive economy.”
In relation to infrastructure the research welcomes increased funding pledged under Project Ireland 2040.
But it says challenges remain in the delivery of connected infrastructure projects that drive growth and maximise investment returns.
It also states that it is vital that proper governance measures are in place to make sure value for money is achieved and that the economy does not become overheated.
The study also looks at the digital economy and finds that the full impact of rapid digitalisation in recent years is not apparent in national productivity data.
It also expresses concern that when it comes to productivity, small and medium sized enterprises here are underperforming compared to larger firms.
It recommends efforts be focused on lifting SMEs performance by enhancing digital knowledge and improving finance for them.
On the topic of human capital, the NCC says it is worried that growing demands on higher education and persistent under-resourcing of it are placing Ireland at a considerable disadvantage internationally when it comes to producing talent.
It says it is crucial that the funding mechanism for the sector be reformed to ensure participation is increased and quality is high and in-line with businesses’ needs.
The study also finds that cost of credit is higher here than in other euro area nations and it says this is a concern.
In particular it highlights the cost of working capital as a major issue.
The NCC expresses disquiet that Ireland is an expensive and a slow jurisdiction in which to enforce a commercial contract.
It also points to the high cost of legal fees compared to other EU countries, such as Germany, France, and Spain.
Expeditious reforms that aim to increase competition and improve transparency in the sector are vital, it says.
So too is the quick implementation of the Cost of Insurance Working Group’s recommendations, it says.
The NCC says is clear from business groups that the rising price of public liability insurance is inflating cost of doing business here and adversely affecting our competitiveness.
“It is imperative that progress is made on these recommendations by the relevant Government Departments and State bodies over the course of 2020, supporting competitiveness and sustainable economic growth so that our living standards and quality of life can continue to improve,” said Dr Ruane.
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