The Irish Congress of Trade Unions has predicted that inflation could hit 6.5% by January because of interest rate increases by the European Central Bank.
Speaking as social partners resume talks on a new national wage agreement, ICTU General Secretary David Begg said the Government should have a word with the head of the ECB, Jean Claude Trichet.
Mr Begg said yesterday's rate increases would damage the Irish economy, hinder investment, and make life impossible for people trying to pay mortgages.
Mr Begg has already called for a review of the tax system, including the taxation of capital gains as income.
However, employers' group IBEC described his proposals as unhelpful, unrealistic and a throwback to the dark ages.
Director General Turlough O'Sullivan said enterprise was the only way forward for the economy, and that Ireland must be an attractive place for industry to come.
He described the Congress proposals as counterproductive, adding that they would neither attract nor retain investors in Ireland.
Tom Parlon, head of the Construction Industry Federation, warned that the sector was under severe pressure to keep businesses going, with some even facing liquidation.
He called for pay restraint and incentives to encourage the sale of houses and to get confidence back into the market.
Financial position
The social partners resumed talks at Government Buildings today, following the adjournment Wednesday to allow the parties time to digest the poor Revenue figures.
It is expected that employer and union representatives will respond to the deteriorating financial position presented to them by the Taoiseach, the Tánaiste, and the Minister for Finance earlier this week.
The half-year Exchequer returns predict a €3bn tax shortfall for this year, and the Government is expected to disclose its plans for addressing that deficit next week.
Tánaiste and Enterprise, Trade and Employment Minister Mary Coughlan has said the economy is not in meltdown nor was Ireland returning to the financial difficulties of the 1980s.
She said the Cabinet would address all the issues about public finances at its meeting next week. On Wednesday, Government figures were published showing that there was a shortfall of almost €1.5bn, or 7%, in tax receipts in the first six months of this year.
Ms Coughlan said one of the main priorities for the Government was capital investment allowing the maintenance of the well-being of the economy.
She said that listening to commentators one would think that the country just closed down last week. It was important to remember that the Government would be spending €8.5bn this year, she said.
Ms Coughlan said her message to investors was that Ireland was a good economy, the fundamentals were right, we are open for business, we are flexible and that we have the management capacity to engender confidence in the economy.
She said nothing was being ruled in or out but that the decisions would be based on the Government's priority on a background of competitiveness, sustainability and caring for the vulnerable.
Mr Lenihan said the savings in public expenditure to be announced next week will not be a budget.
