Address to Irish Austrian Business Forum

Speech

Minister Flanagan’s address at the Irish-Austrian Business Forum

The Great Room, Shelbourne Hotel, 7 October 2014

President Fischer, Ladies and Gentlemen,

It is my great pleasure to say a few words of welcome before handing over to President Fischer. I know that he is no stranger to Ireland, and that he has many friends here, including President Michael D. Higgins and past and present members of the Oireachtas, our Parliament. His official visit comes just over eight years since he received our former President, Mary McAleese, at the Hofburg in Vienna. At that time, in summer 2006, none of us could have predicted the economic and financial crisis which would be triggered a year later.

In the meantime, we in Ireland have had to deal with a range of very serious problems: the unwinding of a property bubble with an acute impact on the construction and domestic financial sectors, a rapid rise in unemployment, a significant decline in GDP, and a fall of nearly a third in tax revenues. Addressing these and other challenges required painful and determined measures by the Irish Government, to set our economy back on a path towards sustainable growth. We had to take radical steps to reform our economy, stabilise our public finances and restore economic competitiveness.

In welcoming President Fischer, I also wish to thank him and the Austrian people for the solidarity shown to us, which continues to be demonstrated. At the height of the crisis, in November 2010, Ireland relied on the support of our EU partners to enable us to borrow money at sustainable rates in order to fund public services. Today, thanks to the policies pursued by the Government since we took office in 2011, our bond yields have reached historic lows of below 2 per cent.

And while we are still working to reduce unemployment and to tackle other serious consequences of the crisis, including an enormous legacy of debt, I’m very pleased to be able to speak of an economy which has emerged decisively from the economic crisis and has put the uncertainties of the last few years squarely behind us. It is clear that the sacrifices we made – and they were big sacrifices – are paying off. There is no longer any doubt about the sustainability of the Irish economy and our international reputation has been rebuilt through the hard work of our Embassy network and the State Agencies.

In the second quarter of 2014, Ireland’s GDP grew at an annual rate of 7.7 per cent. This is the highest growth rate achieved in many years, and puts our economic performance well ahead of our projections from only a few months ago.

Our domestic economy is strengthening.

We have made very significant progress in job creation. 61,000 additional jobs were created in Ireland in 2013 – that is nearly 1,200 jobs a week, which for an economy with 4.6 million people is very solid progress. While still too high, the standardised unemployment rate has fallen by four percentage points since its peak in April 2012.

Domestic demand is strengthening. Retail sales increased by 6.5 per cent in the first half of 2014, and consumer sentiment hit a seven-year high in July.

As public spending remains on target, we expect to significantly outperform our goal of bringing in a budget deficit of 4.8 per cent for 2014. Our longstanding commitment to reduce the deficit to below 3 per cent of GDP in 2015 will be met with greater ease than we had anticipated, and we will be able to move towards our medium-term goal of achieving a balanced budget by 2018. The Minister for Finance, Michael Noonan, will present the latest forecasts in his budget for 2015 this day next week.

Many factors have contributed to Ireland’s economic recovery, but the performance of our exporting industries – both indigenous and multinational – has been the major driver of economic growth. Export levels are at an all-time high, significantly higher than the pre-crisis peak reached in 2007. Net exports grew by 13 per cent in the second quarter of 2014 compared with the same period in 2013.

[As Julie Sinammon has already said,] Much of this has been due to the performance of indigenous Irish exporting companies and start-ups, many of which have proven themselves to be among the most dynamic and innovative in the world. With the support of Enterprise Ireland and the Embassy network in my own Department, many of these companies are now reaching new markets with high-quality products and have benefited from significant improvements in competitiveness in the Irish economy.

It would be remiss of me not to mention also Ireland’s attractiveness as a place to do business and to invest in. In fact, Forbes magazine ranks us as the best country in the world for business.

We have one of the most open and progressive economies in the world and independent studies rank Ireland first in the world for inward investment by quality and value, and as the best country in Western Europe in which to invest.

Ireland’s competitiveness relative to our trading partners has improved significantly in recent years. Labour costs and other business costs have come down. We are ranked first in the world for the flexibility and adaptability of our workforce, and first in the world for the availability of skilled labour. We offer a young, highly-educated workforce in the only English-speaking country in the Eurozone. And we maintain a favourable business climate, including a fully transparent corporate tax system with a stable, low corporate tax rate.

In 2013, trade in goods and services between Ireland and Austria increased to €1.49 billion. I am determined to further increase this figure by working together with our partners in the agencies and with the companies represented here today.

I would like to thank Advantage Austria for the opportunity to speak to you. And to the companies, I wish you every success in your networking here today and in your future endeavours.