An economic forecaster has downgraded its predictions for growth in Ireland this year and next.
Employers' representative group Ibec said it now expected Irish gross domestic product to grow 0.8 per cent this year, compared to an earlier forecast of 1 per cent.
In its latest Quarterly Economic Outlook, Ibec also revised its growth prediction for 2013 from 2.3 per cent to 1.8 per cent.
The business lobby group said the downward revisions were the result of faltering economic growth in the rest of Europe and heightened consumer worries at home.
It said the Irish economy was performing relatively well given slowing demand for exports, but said strong growth would remain elusive.
Ibec claimed some proposals from the Irish Government would not support job creation but would damage growth and undermine the recovery.
The group said any move to introduce a statutory sick pay scheme or hike Pay-Related Social Insurance (PRSI) would cost thousands of jobs.
Ibec chief economist Fergal O’Brien said: “Companies are putting together budgets and business plans for 2013. If employment costs rise they will be much less likely to take on new staff. Some will be forced to downsize or go out of business. The focus must be on cutting public expenditure and raising revenue in a way that is least damaging to growth. The most damaging thing Government could do in Budget 2013 would be to add to the cost of employment.”
The group said the budget must also focus on supporting activity in the domestic economy.
It said consumer spending would drop by a further 2 per cent this year and that domestic demand remained fragile.
Mr O’Brien added: “Austerity alone is not the answer - we need Government to deliver the conditions for economic growth. We need an ambitious growth strategy that supports investment, addresses the weakness in the domestic economy and rebuilds confidence.”
PA