The business representative body, IBEC, has said there is an urgent need for the Government to return to good economic management.
IBEC's Director of Economic Policy said employers are very worried about the country's public finances and that the Government needs to take hard decisions now and take them rapidly.
Brian Geoghegan warned that the country is heading for very turbulent waters unless that happens. He said that inflation also needs to be tackled.
Mr Geoghegan also said that IBEC is worried that the outcome to the public sector pay benchmarking process might have implications for the private sector where it could raise wage expectations again.
He also said that there is a very strong chance that there will not be a replacement deal to the PPF Social Partnership agreement but that this does not mean that IBEC will not try to achieve a new deal.
In its quarterly Economic Trends report which was published today, IBEC also said the economy is suffering from the consequences of excess demand for goods and services built up over the last two years. It said that this is why we have high inflation.
The report said that Ireland’s inflation problem will persist until either we manage that excess demand or we reach a level of uncompetitiveness that puts a break on the economy.
The employers' body warned that Ireland is now very close to embedding a vicious inflationary spiral into the economy that could reduce the country’s economic competitiveness to an extent that will cause long-term damage to our potential growth rate.
However, in an interview to be broadcast on RTÉ this evening, the Minister for Finance insisted that Ireland's public finances will not be in significant deficit for this year. Charlie McCreevy said that we are in danger of talking ourselves into a crisis in relation to the public finances that does not exist.
Mr McCreevy said the Government is very anxious to have Social Partnership renewed but that the main agreement in relation to renewal must come between the employers and the Trade Union movement.
The interview between George Lee, Economics Editor, and Charlie McCreevy will be broadcast tonight on RTÉ 1 at 10.50pm in the new series, “More to Do”.
