The Minister for Finance, Brian Cowen, TD, today welcomed the comments by the President of the European Central Bank, Jean Claude Trichet, who cited Ireland as a “magnificent performer” in making the argument for structural reform in the EU/euro zone economies. Coming from the President of the ECB, this represents a very significant endorsement of this Government’s economic and budgetary policies
The Minister stated:
“We intend to stick to our policies which have proved so successful. Ireland has higher economic growth and more employment as a result.
In particular, I would point to the low rate of tax on employment in Ireland as an important factor in increasing the number of jobs here. OECD data show that Ireland has one of the lowest tax wedges of the 30 member OECD countries. This provides strong incentives both for employers to hire more workers, for people to join the work force and is reflected in the very strong employment performance of the economy in recent years. There are now more than 2,000,000 people in the workforce.”
The Minister pointed out that in Ireland, domestic demand (i.e., spending and investment by consumers and business) is now the key driver of economic growth. This is contributing to strong increases in employment, in sectors such as construction and also in highly-skilled areas such as financial and business services where employment grew by some 20,000 in the year to the 2nd quarter of 2005. This is in contrast to many of the larger, euro zone economies where growth, particularly in the domestic economies, is very low.
The Minister agrees with the ECB President that higher oil prices are a risk going forward, both for the international economy generally and for Ireland. "In fact, in its recent Economic Review and Outlook publication, my Department identified persistent high oil prices as a risk to growth and prices"
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