The Tánaiste has welcomed an independent report which says the economy could grow by nearly 3% next year.

The report by the employers' group IBEC forecasts growth of up to 2.8% next year which is far higher than the growth planned in the Budget.

IBEC says the successful bailout exit was "a testament to sensible government policy and the strength and resilience of the country's business sector".

The group says it is now time to reduce income tax, reform public sector pensions, invest much more in infrastructure and do more to help get people back to work.

In its 2014 forecasts, it revised upwards its GDP growth prediction, from 2.3% to 2.8%, the group predicted that investment in the economy will increase by 15.5% (previous projection 9.7%) and consumer spending will increase by 1.3% (previous projection 1%).

It says Irish income tax is too high, and that in the next budget the government should reduce income tax rates and change the bands.

'Reduce the burden of regulation on business'

It also says that much more reform is needed to safeguard the public finances and that the current public sector pensions liability of about €120 billion is unsustainable.

"The recent changes introduced for new entrants, such as the move to career average earnings rather than a final salary basis, should be extended to all. We must ensure that the public finances into the medium-term are on a sound footing" it said.

It adds that we must not abandon vital reforms. "We need to reduce the burden of regulation on business and radically reform local government to make it more efficient".

Speaking in Brussels, Eamon Gilmore said the government would do everything it could to help grow employment. But he says the IBEC forecast is a good sign for the Irish recovery.