Saturday 21 October 2017

Fresh thinking is needed to get economy moving again

The last few weeks have seen some good news on the economic front. The positive outcome from the EU summit should lead to a reduction in our sovereign debt burden and the Government's infrastructure announcements on Tuesday will provide a much-needed boost for construction activity and help to restore domestic demand.

On top of this, the CSO has revised the growth figures for 2011 upwards to 1.4pc, twice the initial estimate.

Our exports have proven to be incredibly resilient, leading to the better-than-expected growth figure. This boost means that Ireland's peak debt-to-GDP ratio will be 2-3pc lower than anticipated.

To really get on top of our national debt and tackle the unemployment crisis, however, we need growth right across the economy. This requires new thinking and fresh ideas.

The Government has yet to present a comprehensive plan for the whole economy. In fact, some of the positive initiatives have actually been undermined by retrograde steps, which have restricted labour market flexibility or added to the cost of doing business.

Of course there is no silver bullet, but even in the face of constrained public finances a lot more can be done.

IBEC has just published its Action Plan for Recovery, which outlines 50 practical ideas which would make a real difference to Ireland's recovery prospects.

The package of ideas could be delivered at no net additional cost to the Exchequer and includes a wide range of proposals aimed at restoring domestic demand, supporting job creation and delivering world-class public services.

Access to credit remains a real problem for established businesses and start-ups alike.

One solution is to establish a new State-backed investment bank, financed by the European Investment Bank and the National Pensions Reserve Fund, to deliver financing through the existing banking network.

New tax incentives in other parts of the world, particularly the UK, could reduce Ireland's attractiveness as an investment location.

We need to improve our tax offering for mobile investment, to ensure that we stay ahead of our competitors.

We need to ensure that there is a structure to support people getting back to work or onto training courses, and to enforce the conditionality around unemployment assistance.

We also need to revamp the education and training services to meet labour market skills needs. Despite some positive steps, the pace of public-sector reform needs to accelerate.

There is a need for more flexible work practices and an overhaul of public procurement procedures to give SMEs a chance to compete for contracts. A greater use of outsourcing would also help save money and help protect frontline services.

The Irish economy has the potential to grow at twice the EU average, 3-4pc per annum, over the next 20 years, but we can't just sit back and expect it to happen.

We need to take the steps necessary to realise this potential and we need to push on with practical growth ideas for the whole economy.

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