The current political instability is ruining Ireland's international reputation and is proving "embarrassing" for those tasked with selling the country overseas, business group Ibec said today.

The lobby group's director-general Danny McCoy called for a quick resolution to the uncertainty, which he said was also affecting domestic confidence.

"It's certainly the case that last week we saw behaviour in the Government which was unbefitting for an economy that is struggling with its international reputation," said Mr McCoy in an interview on RTÉ's Morning Ireland.

"The business community would certainly like to see some certainty be brought to the political process because it's damaging confidence both of domestic consumers, but more critically, of international investors and bondholders."

Mr McCoy said attempts to sell Ireland as a stable environment for investment were being undermined by political rows and said the sight of a Government "that can't get its act together" was further ruining the country's reputation.

"This is very damaging for us...we've got a huge hill to climb and we all need to do it together and the political uncertainty just doesn't help," he said.

Mr McCoy also advised of the need for "a sensible outcome" in the forthcoming election and warned against making debt restructuring an electoral issue.

"This election has to be seen to be sensible for an economy in serious trouble. We have to get a way out of this. To get competitiveness back again, to get our public finances under control quickly and to get back into those bond markets," he said.

Mr McCoy said that there will be widespread interest in whether Ireland opts to make bondholders share the pain of the bailout with taxpayers. However, he said giving in to a populist wish to burn bondholders should be avoided at all costs.

"Because Ireland relies on foreign direct investment we have to be seen as people who are credible and trustworthy and sensible. We cannot put our fate in the hands of knee-jerk populism.

"The knee-jerk reaction will be to burn the bondholders but we're a country that's going to need to get back to the bond markets quickly and we need to have a credible strategy around this,” he added.