The Government is being warned of increased pressure on infrastructure and public services as a result of improved economic conditions.

Ibec has revised up its GDP forecast for this year to 7.1%, but is warning that such growth brings problems with it.

The business lobbying group says the Government should ring fence the windfall from corporation tax revenue, which is €3bn ahead of target, for investment projects.

It calls for investment in housing, infrastructure, education and health to avoid 'pressure points' from slowing economic momentum, and for public spending to be increased from 2% to 4% of GDP over the next five years.

The report predicts unemployment to fall below 8% by the end of next year and Irish exports to rise 25% this year thanks to a weak euro.

However, Ibec identifies an regional imbalance in the Irish recovery between Dublin and the rest of the country, and "chronic under-investment" in housing, which will have wide effects across Irish society.

Chief economist with Ibec, Fergal O'Brien, says rather than incorporating the cash into daily expenditure it should be used on one-off projects: