Unless further corrective action is taken to stabilise the State's ailing public finances, Ireland's reputation in the international investment community may be damaged, employers’ group Ibec warned today.
In its pre-Budget submission published today, Ibec said that the “over-riding issue” facing Ireland in the year ahead is the stability of our public finances.
Director general Turlough O’Sullivan said: “Unless very serious corrective action is taken - beyond that already announced - the public finances will deteriorate considerably further in 2009.
Mr O’Sullivan said: “This could have far reaching implications for Ireland’s position within the European Monetary Union and would be extremely damaging to the country’s reputation in the international investment community.”
“If we show courage and judgment now, Ireland will weather this storm and will be in a solid position when there is a resurgence in global economic activity,” he said.
The group said there should be no tax or PRSI increases as these would be very damaging to economic growth and would ultimately lead to further reductions in total tax revenues.
It advocated reducing current expenditure by €2.5 billion from that currently planned for 2009 which it said may involve a reduction of about 2 per cent from the 2008 outturn.
It also called for a reduction in the size of the public sector and for the public sector wage bill to be reduced by 5 per cent.
”We should maintain an ambitious programme of capital investment as this will help cushion some of the slowdown experienced elsewhere in the construction sector and address serious deficits in the country’s infrastructure,” Mr O’Sullivan.