Belfast Telegraph

Republic braced for savage Budget

The Republic is bracing itself for the most feared budget in the state's history as the Irish government put the final touches to its €6bn (£5bn) cost-cutting plan.

Finance Minister Brian Lenihan is widely expected to wield the axe on social welfare, including jobseekers' and child benefit, in a bid to cut public spending by €4.5bn (£3.8bn).

Speculation has mounted that public sector wages will be capped and ministers' salaries cut as the Irish government takes on a four-year battle to restore the state's crippled finances.

Taoiseach Brian Cowen's shaky coalition will try to impose the cuts with only a two-seat majority.

The potentially savage package comes just over a week after his government revealed it was taking an €85bn (£72bn) bailout from the International Monetary Fund and the EU.

Mr Cowen's crippled coalition government has suffered widespread criticism for the move from a public angry at the perceived surrender of the state's hard-won economic sovereignty.

The €6bn package, containing €1.5bn (£1.3bn) in new taxes and €4.5bn in public spending cuts, is the first phase of a four-year budgetary roadmap to raise €15bn (£13bn) and plug the gap in the beleaguered economy.

Potential excise and duty changes, including in the price of petrol and alcohol will come into force from midnight tomorrow and will have to be voted on in the Dail after the budget is unveiled.

The Social Welfare Bill, which gives legal effect to any budget changes in the dole or child benefit, is expected to be voted on by the end of the week while the finer details of the plan will be debated in the Finance Bill in the new year.

The Budget will be the fourth time since October 2008 that the Fianna Fail/Green Party coalition has been forced to introduce harsh measures to tackle the black hole in the public finances.

Lobby groups made a last-ditch plea to Mr Lenihan to either save or make specific cuts, with the Irish Heart Foundation calling for a hike in cigarette prices.