Irish prime minister Brian Cowen has refused to rule out a projected 7 billion euro package of spending cuts and tax rises in the forthcoming budget.
Emergency measures could very well reach that scale, despite the fact that it overshadows every previous prediction. The potential figure also comes after an Economic and Social Research Institute (ESRI) warning that the Government’s top-heavy fiscal agenda threatens to keep the nation bogged down in recession.
The Irish cabinet are scheduled to meet on Monday and Tuesday to tackle the deteriorating economic situation. Opposition party Fine Gael finance spokesman Michael Noonan told the press that the 7 billion "correction" option was being considered after his top level civil service briefing this week.
Noonan also indicated that the figure was so huge because 15 billion worth of cuts and tax rises may be needed to get the deficit down to the 3 percent of GDP by the 2014 target, not the previous estimate of €7.5bn. Meanwhile Cowen insisted that nothing had been finalised, but he added that "significant adjustments" would be needed over the next four years.
"There are two different set of numbers now. The difference between 4 billion and 7 billion on a correction in the first budget," Noonan told the press. "It is hard to see how two respected organisations could arrive at such diametrically different figures."
Noonan's comments prompted an immediate response from the finance department, which insisted that opposition spokespeople had been informed a range of fiscal models of 3 billion, 4.5 billion and 7 billion, but "at no point was any specific target given," they said.
Cowen added the Irish government was consulting with the European Union and waiting to study further growth projections before outlining its plans.