The State needs better regulators in energy, telecoms and professional services to help drive down the cost of doing business in the Republic, according to the latest research from the National Competitiveness Council (NCC).
The study into prices and costs finds that stronger regulation would ensure "more vigorous competition" and would thus lead to lower costs for Irish companies.
The NCC says the Government could also help to ease Irish price growth by opening the market to foreign competition in utilities, services and food.
The NCC says that both business and consumer costs in the Republic are now "out of line" with other industrialised economies. It calls on the Government to step up efforts to improve cost competitiveness over a number of policy areas.
The fall in the cost of insurance for many business over the past year has, according to the NCC, demonstrated the potential of "determined" Government action in improving cost competitiveness for business.
Electricity is raised as an area of particular concern for business, with industrial users in the Republic paying more for electricity than any other country surveyed.
Over the past three years, electricity prices for business have climbed by some 40 per cent, with typical Irish industrial users paying 40 per cent more for their power than their UK equivalents.
This differential is not justified by increases in global fuel costs, the NCC concludes.
It is furthermore compounded by the cost of other services, with waste management, for example, costing 47 per cent more in 2003 than in 2001.
The Council also points to the problem of high wage growth, with Irish salaries rising faster than in any other EU country for several years.
Wages in the Republic grew by 37.1 per cent between 1998 and 2003, while German pay rose by just 8.7 per cent over the same period.
By this year, average gross pay in the Republic was estimated at €38,410. This compares to an EU average of €34,630 and a UK average of €35,750.
The NCC acknowledges, however, that the relatively low level of employers' social security contributions in the Republic might offset higher wages.
Office space is also more expensive in the Republic than in other places, according to the NCC report. The Council found, based on data drawn from estate agents, that offices are more expensive only in France and the UK.
Irish retail rents have also grown dramatically over the past few years, with the NCC quoting research showing that they rose by more than 88 per cent between 2000 and 2003.
Between January and July this year, the annual rental increase on Dublin's Grafton Street was 10 per cent, with rents having climbed by 14 per cent in the previous six months.
