The Economic and Social Research Institute (ESRI) is advising the government to adopt a neutral budget this year to avoid a return to boom-bust economics.

In its latest report, the think-tank says the €1.5 billion in spending increases and lower taxes planned for Budget 2016 is not needed in an economy already growing at the fastest pace in Europe.

The ESRI says Ireland's economy will continue to perform strongly, with GDP growth of 6% this year and 4.5% next year.

Economist David Duffy told Newstalk.com's Breakfast show that consumer spending is one of the main factors driving growth:

Unemployment is also expected to decline, with the ESRI forecasting joblessness will fall to 9% by the end of this year and 8% by the end of next year.

Speaking about the report, Dr Kieran McQuinn of the ESRI said: “A notable feature of economic performance this year has been the increase observed in personal consumption indicating that households are finally beginning to experience the recovery”.

Co-editor Dr David Duffy of the ESRI said:  “In our view the increase in the pace of economic growth reinforces the case for a neutral budget this year. As the economy is now growing strongly, we do not see any macroeconomic rationale for stimulating further the level of economic activity.”