Tough Budget Looms As Irish Economy Nosedives

The Irish Cabinet is meeting again today as part of preparations for next week's much-anticipated 'emergency' Budget.

Already, estimates of the Republic of Ireland's predicted deficit have quadrupled, so it's small wonder ministers met for more than seven hours on Sunday.

They were trying to identify areas where cuts can be made and taxes increased in order to plug the massive hole in the public finances.

Speaking afterwards, Brian Cowen said Irish people should expect a drop of up to 10% in their living standards over the next two years.

He reiterated the need for a broadening of Ireland's tax base, but gave no hint what taxes would be altered.

Last week the Taoiseach said the State has to correct a budget deficit of 8% or €16bn.

Brian Cowen says the country is facing a scenario where "we have 2010 expenditure with 2003 income".

He was speaking following the seventh Cabinet meeting in two weeks as the Government prepares for the supplementary Budget on April 7.

Earlier this month, Mr Cowen told Opposition leaders that the Department of Finance had estimated a shortfall of just €4.5 billion would have to be covered by the Budget, but admitted the final figure could be greater making the budget a "moving target".

It has since proved to be four times that amount, as indicated and yesterday, the Taoiseach said the scale of the challenge "will be difficult".

Fine Gael Leader Enda Kenny and Labour Party Leader Eamon Gilmore both complained to Mr Cowen recently that the Opposition parties were not sufficiently briefed on the detailed figures available to Government, to enable them to support the tough measures ahead.

See: April Budget To Be Tougher Than Expected