IBEC has warned that Ireland's 40 per cent increase in public expenditure over the past two years is a "recipe for disaster".
Speaking at this afternoon's publishing of IBEC's new report, Enterprise Policy in a Competitive Economy, IBEC director general Mr Turlough O' Sullivan said Ireland was in danger of losing its competitive edge as a result.
"Unless we take corrective action now we are in danger of losing the hard earned benefits that we all enjoyed over the past 10 years," Mr O’Sullivan said.
"The single most worrying problem is the rapid deterioration in the public finances; there was a massive 22 per cent increase in Government expenditure last year. Taking this year into account, the increase over these two years could approach 40 per cent.
"Costs to business through traffic congestion, insurance, energy and labour are rising much more rapidly than in our competitor countries and jobs are being lost as a result. We have the capacity to meet difficult challenges but we are not at present going about it the right way," Mr Sullivan said.
However, in the medium term, the report says, Ireland can and should recover its healthy growth path to a sustainable five per cent or so.
IBEC says the report, which sets out business requirements in the run up to the general election, will act as a barometer to determine the support for the business agenda by the various political parties.
Describing Ireland as a "supply-driven" economy, the report recommends Ireland retains its 12.5 per cent rate of corporation tax as part of government policy for the long term.
It also identifies major infrastructural deficits in the key areas of roads, air and sea, public transport, energy, telecommunications and waste.
In a reference to last week's report into the insurance industry, IBEC described the rapid increase in insurance costs as "most worrying" and said it was a problem the government must urgently address
Among the major recommendations in report are that:
- The private sector should take over a number of public services, such as secretarial services payroll, maintenance, IT, training and catering.
- Establish a National Infrastructural Agency.
- Streamline the number of regulators.
- Competitiveness-proof any new legislation.
- Develop eGovernment to enhance Ireland's competitiveness.