A lack of foresight by Minister for Finance Brian Cowen has been blamed for the growing difficulties in the economy.
Figures published yesterday showed economic growth 1.2 per cent lower than the minister projected in last December's Budget, while the Exchequer deficit is set to be 0.3 per cent greater than Mr Cowen's expectation three months ago.
The Economic and Social Research Institute (ESRI) said appreciation of the euro, the economic slump in the US and problems in the in international markets were contributing to the worsening outlook.
But the slower rate of housing completions was the principal reason for the decline.
Sinn Féin spokesman on economic affairs Arthur Morgan said the Tánaiste's economic model was "never sustainable", while Labour Party finance spokeswoman Joan Burton was scathing about his handling of the property sector.
"It was Brian Cowen as Minister who refused to intervene in the housing market to prevent the over-inflation of house prices. It was Brian Cowen as Minister who dithered about stamp duty, and Brian Cowen as Minister who botched stamp duty reform when it finally came," Ms Burton said.
"Now it is clear that he has no strategy for dealing with this crisis. The Government seems to be scrabbling around to find ways of curtailing spending growth, but there is no transparent or thought-through strategy in place."
The ESRI also predicted there would be no increase in employment this year, while the numbers out of work would rise by 33,000 to 135,000 - an increase of 1.4 per cent on last year.
In further bad news for the economy yesterday, inflation figures showed an increase of 1.2 per cent on the previous year. With employers urging pay restraint ahead of upcoming pay talks, Sitpu were quick to call for living standards to be protected.
Mr Morgan said the worsening situation had not "developed overnight".
"For the last five years economic growth has been driven by domestic demand rather than by exports. This was never sustainable but the Government did nothing about it. The Government shamefully allowed the exchequer to become over-reliant on taxes related to consumption and construction," he said.