The Irish economy could "strangle on its own success" if the Government does not speed up the building of new infrastructure, the Small Firms Association (SFA) said yesterday. The group also called on the European Central Bank to cut interest rates in order to stave off deflation.

In a statement, the SFA said delays in constructing the LUAS and the Dublin Port tunnel were "eroding the competitive edge of businesses throughout the country".

The SFA's director, Mr Pat Delaney, said because of the weakness of the larger economies in the euro zone and the sustained buoyancy of the US dollar, there was now a danger of a euro zone deflationary recession.