IBEC, the main Irish business representative group, says today in its pre-Budget submission, that GDP (gross domestic product) will fall by a further 1.6% in 2010 only returning to growth of around 1.7% in 2011. It calls for a €5bn fiscal adjustment; jobs stimulus; a deferral of a carbon tax and a lower minimum wage.

IBEC says the loss to the exchequer from cross-border shopping is €430m annually and it has called for an immediate reduction in excise on alcohol.

IBEC says serious uncertainties still prevail with regard to the restoration of normal credit conditions; also, the precarious nature of the public finances injects considerable doubt as to the extent of the deflationary impulse the 2010 Budget will impart; as a result, its expectation is that consumer spending will continue to be weak. growth will fall back by a further 1.6% in 2010 only returning to growth of around 1.7% in 2011. Provided the global economy continues to gain pace through 2011 - - which IBEC says is not certain - - GDP growth could accelerate over the course of the next two years, perhaps hitting 3.5% to 4% in 2013.

It does not expect any employment growth before 2012. The fall in the labour force arising out of renewed emigration and a lower participation rate should contain the rate of unemployment to under 14%.

Its recommendation to government is that significant steps towards achieving the target to reduce the deficit on the General Government Balance to 3% of GDP by 2013 should be made in the 2010 Budget and that the vast bulk of this reduction should be achieved through spending cuts, including pay and social welfare. There is a short window of deflation in which such reductions could be achieved while protecting real living standards.

The fiscal adjustment in Budget 2010 of €5bn should consist of a €4bn reduction in current expenditure; €0.5bn in tax base broadening; and €0.5bn in capital expenditure savings The €4bn current expenditure savings should comprise of €1.4bn in public sector pay; €1.3bn in social welfare costs and €1.3bn in delivery of services

Total social welfare costs to the exchequer have increased from 33% of tax revenue in 2007 to 67% of tax revenue in 2009. IBEC says it is therefore impractical to attempt to correct the public finances without seeking to reduce the social welfare budget.

IBEC proposes the suspension of employers' PRSI payments to help use the current period of deflation to drive down costs, while minimising employment shedding in the course of the recession. It also wants an extension of employment supports.

It wants to reduce the minimum wage and also "appropriate adjustments" to social welfare. It also calls for a comprehensive benchmarking of pay in the public service.

The business lobby group argues that there must be no further increase in the income tax burden.

IBEC says that it would be inappropriate to introduce a carbon tax at present due to the unprecedented economic difficulties and competitiveness challenges facing Irish business. The fact that emissions have fallen substantially as a result of the economic crisis also undermines the case for immediate introduction of a carbon tax.

IBEC comprises constituent sectoral groups and it appears to have just rubber-stamped the technology group's input, which is to continue funding and hope for the best.

"Ireland needs to strive to become an innovation leader in Europe. To achieve this, an increase in R&D expenditure is needed throughout the innovation system. The Government must ensure that supports for R&D match those offered to industry and higher education institutions by leading innovators such as Finland," the submission says.