Rising costs are expected to remain the largest threat to business expansion in the coming 12 months, according to the Chambers of Commerce Ireland (CCI) business confidence survey.
The report found that the majority of small and medium sized (SMEs) businesses in Ireland are "cautiously optimistic" about the economic environment for 2004.
Forty two per cent of respondents to the survey expect the business environment to remain similar to 2003 while 28 per cent are expecting an improvement.
A narrow majority of the 600 countries surveyed are expecting an increase in turnover next year.
However, 82 per cent of businesses see rising costs as the key threat to businesses with rising labour and local authority charges were also noted.
According to many of the firms surveyed, they will look for pay and hiring freezes in a bid to keep costs down.
Rising insurance costs are another key strand of the overall cost of doing business in the State. Over 60 per cent of those surveyed dismissed the Government initiatives to tackle rising costs in the sector saying they will not have a significant impact on premiums next year.
Mr Mark Staunton, president of the CCI, said the Government was responsible for
eroding competitiveness through stealth taxes and rising local authority charges.