ONE of the biggest budget deficits in the world helped send Ireland down three places in the annual competitiveness league prepared by the World Economic Forum (WEF).
Ireland is ranked 25th out of 133 countries in the latest review. Only Spain (33rd), Portugal (43rd), Italy (48th) and Greece (71st) rank lower among the EU-15 member states.
Last year's Irish budget deficit of 6.4pc of output (GDP) was the 125th largest among the countries surveyed. Only eight developing countries, including Zimbabwe, had bigger government borrowings compared to the size of their economies.
"Macro-economic stability" is one of the criteria used by the independent WEF.
Ireland had scored highly in this category in previous surveys, but is ranked only 65th in the current one.
The surveys of business leaders which are used to devise the rankings, along with hard data such as budget deficits, showed Ireland at 127th in terms of flexibility of pay determination, and 121st for the soundness of its banks.
It ranked 74th on waste in government spending, and 49th in trust of politicians. It was 65th in terms of infrastructure, of which the state of the ports got the lowest marks.
Ireland is rated among the top ten for the quality of education and eighth on regulations required to start a business.
It once again leads the world in its approach and success in attracting foreign direct investment (FDI). The WEF regards FDI as important for competitiveness, saying it gives countries access to advanced products and the ability to use them.
"In this respect, it is particularly worrisome that, after four years of solid growth, FDI declined by an estimated 15pc in 2008 with further deterioration expected for 2009," the WEF said in its report.
The USA lost its number one spot as the most competitive economy to Switzerland.
Highly-taxed countries Sweden, Denmark and Finland rank fourth, fifth and sixth as competitive economies.