Business lobby group Ibec said the Minister for Finance's planned 5 per cent increase in current expenditure for 2008 leaves "very little room" for further discretionary expenditure on Budget day.
Director of policy Danny McCoy said: "Government must now focus on reducing unit costs so that improved services can be delivered within reasonable budgetary constraints."
He said today's Pre-Budget Outlook "has not demonstrated that more is being done to achieve improved value-for-money from the existing pool of public expenditure".
"'The changes to the budgetary process are a useful innovation and are a move towards providing greater transparency in the management of the public finances.
"There still are a number of areas, however, where better quality information could be provided, particularly in relation to the large amounts of money allowed for contingencies."
On the revised growth forecasts, Mr McCoy said: "While we share the Department's view that GDP growth will slow next year, we would be more optimist on the economic outlook for 2009 and 2010, provided we get the correct policy response from Government.
"Ibec believes that, if on Budget day further corrective action is taken to restore competitiveness and boost productivity through accelerating capital investment under the NDP, we could see growth levels increase to over 4 per cent in the coming years."