A major new report is warning that rising rents and labour costs are posing a threat to Irish businesses.

The National Competitiveness Council (NCC) report says the Irish economy is performing well and becoming more cost competitive compared the rest of the Euro area.

However it warns that Ireland remains “particularly vulnerable” to a potential global economic slowdown and the looming threat of Brexit.

The Cost of Doing Business in Ireland 2019 report warns that Irish labour costs are increasing four times faster than inflation.

It also says businesses are struggling to access credit with some of the highest interest rates in the EU.

Meanwhile businesses are facing a “steady rise” in commercial rent prices.

Concern

NCC Chairman Professor Peter Clinch said that while the “overall cost picture” for businesses is positive, there are a number of areas of concern.

“After years of moderate growth, in 2018, labour costs increased by 2.9% - four times faster than consumer prices,” he said.

“Without similar increases in labour productivity, this increase in costs will simply put pressure on Irish prices.

He said there are also “other pressure points” facing businesses.

“The rental price of Irish commercial property has continued to increase at a steady pace, Irish businesses face higher costs when accessing credit relative to the euro area, and the prices business pay for services are increasing at the fourth fastest rate in the EU,” he said.

Costs

The report warns that, with interest rate in Ireland at 3.3% and those in the Euro area 2% - Irish businesses face costs that are exponentially higher than the European counterparts.

“With the current international economic backdrop, especially with what is happening in the UK, we must do what we can to maintain the competitiveness of the Irish economy,” said Professor Clinch.

“To secure our prosperity, we must not price ourselves out of international markets.”

The Cost of Doing Business in Ireland report uses the latest available international data to compare a wide range of costs that Irish businesses face compared to their European counterparts.