Ireland and Italy least competitive of EU states

IRELAND HAS been ranked second-last in an influential European survey measuring competitiveness in the major EU economies.

The 2009 European Growth and Jobs Indicator due to be published today shows Ireland has slipped from fourth to 13th place in a single year. It notes that economic growth, productivity and the public finances have all “deteriorated precipitously”, driving the country’s overall score downwards below every EU country surveyed, bar Italy.

Ireland’s reliance on external trade and the importance of its financial services sector in national output made it particularly susceptible to the global economic downswing and international financial turmoil, while the ongoing correction in construction only made matters worse, said the survey, which added that Ireland’s fall has been unprecedented.

The annual competitiveness survey, which is compiled by the insurer Allianz and the Lisbon Council think tank, measures indicators such as economic growth, productivity, education levels and investment.

Finland is the top-ranked country while Poland is ranked as the second most-competitive state, results that repeat the 2008 survey. The Netherlands is ranked third, up from ninth place in last year’s rankings.

Ireland’s position has weakened in almost every performance indicator measured by the survey. It fell from second to 12th place in economic growth; seventh to eight place in productivity; sixth to eighth place for employment; and fifth to 14th place for sustainability of public finances.

It retained its lowly 14th place for investment in capital and new equipment. The only positive was that it kept its third-ranked position for education.

The survey concluded that no EU country had been spared from the global economic downturn, with all seeing declines in growth rates and labour productivity. This will be followed by a deterioration in employment and the public finances of EU states, increasing the need for governments to undertake vital reforms to their economies, the report said.

“Today, Europe finds itself in the throes of what may still prove to be the deepest recession since 1929. With public coffers stretched to the max, rising unemployment across our continent and rapidly declining private sector investment, there has never been a more urgent time – or better opportunity – to lay the solid foundation on which we can build tomorrow’s growth, employment and prosperity,” concluded the survey.

The survey called for member states to renew the Lisbon agenda, a reform programme launched at EU level in 2000 aimed at increasing the competitiveness of economies. It aims to boost spending on RD, increase labour market flexibility and provide the basis for economic growth that can create jobs. It says more focus is needed to implement the programme at national level and the EU needs to monitor national efforts closely.

This article appears in the print edition of the Irish Times