IBEC has repeated its call on the Government to drop any plans to increase taxes in the Budget.

The business group says the country does not need a full €3.1 billion retraction in the October budget.

''We can will still meet our deficit targets in percentage terms with an adjustment of €2.6 billion in October,'' IBEC's chief economist Fergal O'Brien points out in the group's latest economic outlook.

IBEC has said that despite a slow start to the year, there are signs that the economy is picking up and is forecasting GDP growth of 1.1% for this year rising to 2.3% in 2014.

But it warned that consumers remained nervous and said it was vital that the Budget did not undermine confidence by increasing taxes.

Today's outlook has predicted that consumer spending is to remain flat this year and increase by 1% in 2014, while the consumer price index will increased by 1% this year and by 1.9% in 2014.

It also predicts that investment in the economy will rise by 7% this year and by 9.7% next year.

In today's outlook, IBEC also welcomed signs of stability appearing in the property market. It said that new targets to address the high level of distressed loans will determine if the country has can restore sustainable growth and a functioning efficient mortgage market.

''Ireland's economy has the capacity to grow by 3.4% per year for the next decade, but only if we make the right decisions. Budget 2014 is an opportunity to support consumer confidence and help businesses grow and create jobs. It is vital that the opportunity is not missed,'' Mr O'Brien advised.