The Cabinet is holding a day-long meeting today to begin the process of formulating December's Budget, which must include savings of €3bn.
However, one economist is urging even tougher cuts to bolster the country's image.
John Fitzgerald of the ESRI said that if the Government made the surprise move of cutting up to €4bn, it could help to lower interest rates on state borrowing.
He asaid: "Yesterday, the Government had to pay 5.5% to borrow money. Everybody in Ireland is going to have to pay more because of the risks seen in the Irish economy. If by doing more (we could reduce the interest rates), it would good for everybody."