The business lobby group, the Small Firms' Association (SFA), has warned that its members fear the economy is "on a knife edge". In its annual autumn economic statement the body said that official growth and employment figures were masking significant job losses .

The organisation said that 12,000 jobs have been lost since the start of the year. The statement also noted that recorded redundancies have increased by 24 per cent. It added that labour costs are increasing by 7 per cent - which is twice the European average.

Mr Pat Delaney, the director of the SFA said that the December budget "will have a pivotal role to play in maintaining the real gains of recent years". His organisation wants the overall thrust of the budget to be "an exercise of discipline in public spending and reductions in employers' PRSI to offset the loss of competitiveness due to labour cost increases which are a serious worry as the economy slows down".

The organisation also pointed to hidden problems in the housing sector where rents have increased by 18 per cent while the number of house completions is down 6,600 on the same period last year. The number of loans being approved has fallen by 15.5 per cent.