IBEC, the Irish Business and Employers' Confederation, has reiterated a call for measures aimed at stimulating consumer spending. This follows an economic outlook published by the group in which it cuts back forecasts for economic growth from 1% to just 0.9% this year.
IBEC says it believes that consumer spending will fall by 2% this year. One of the ways it is suggesting this could be counteracted is by allowing people to draw down part of their private pensions or additional voluntary contributions to spend now. It says that such a move could release €1.3 billion in the economy.
The group says it believes consumer spending will fall by 2% this year, before recovering by 0.5% in 2013.
It said that the challenging economic outlook for this year, both domestically and in the wider euro zone, reinforces the need for the government's jobs strategy to include ambitious new stimulus measures to support jobs and growth, including a major investment in physical and human capital.
It also says the euro looks set to trade at a weaker level with both the dollar and sterling this year, which will have a positive impact on the country's export performance. IBEC predicts that exports will increase by 3% this year and by 4% in 2013.
IBEC said that if consumer confidence improves, there is a possibility of positive economic surprises this year. It points out that budget 2012 did not increase income tax, and the European Central Bank decision to cut interest rates will increase the discretionary income of mortgaged households by 6.5%.
''It is vital that Ireland continues to invest and plan for the future,'' commented IBEC's director general Danny McCoy.
He said that the focus to date has been on correcting the public finances and the banks, which are now both back on track.
''The over-riding priority for 2012 must be getting people back to work. This requires radical new thinking from both the government and the troika,'' he added.