The Department of Finance has warned the social partners that the short-term economic prospects for Ireland remain challenging.
In a presentation at Government Buildings this morning, department officials said the prospects for the period after 2010 could be more benign if the current difficulties are handled appropriately.
According to the presentation, all of the risks highlighted in the Budget have materialised, including the US economic slowdown, the credit crisis, the exchange rate appreciation and the high cost of fuel.
The slowdown in domestic construction has also put pressure on the economy and the department warns that tightening of lending terms may compound the slowdown.
It has also expressed concerns about unemployment, consumer confidence and consumer spending.
It warns that the €600m shortfall in tax revenue so far this year is unlikely to be recouped and other tax categories are also under pressure.
The Government points out that economists are now lowering their forecasts for economic growth to as low as 2% for 2008, and just over 3% for 2009.
The department says that competitiveness and productivity are still a matter for concern, as is inflation.
The Budget predicted inflation for 2008 to average 3%, but most analysts now predict it will be around 4%.
The department forecasts that the growth rate for 2009 will remain modest, but should return to trend by 2010.
It expects unemployment to be between 5½ and 6%, though inflation is likely to ease.
However, it warns that the starting position for the next Budget will be more difficult.
Meanwhile, the Mandate trade union, which represents 44,000 workers in the retail and bar industries, will formally return to social partnership talks today following two years of local collective bargaining.
The union withdrew from partnership in 2006 because it felt national deals had failed low paid workers in the private sector.
A union spokesman said the decision to enter discussions had not been made lightly.
