The Government needs to make cuts of up to €7.5bn over the next four years to put the country's finances on a sustainable path, according to the Economic and Social Research Institute.
In a document outlining possible paths to recovery, the Institute also says we could see a return to full employment by 2015 if we maintain a competitive export sector and contain the cost of the banking crisis.
In today's report the ESRI outlines the consequences of two possible scenarios for the economy - low or high growth.
The latter they say is dependant on a world recovery, competitive export sector, a job-friendly labour market, containing the cost of the banking crisis and a "competitive labour market"- economic parlance for wage cuts.
The ESRI also said it was essential for the Government to implement €7.5bn in cuts from 2011 up to 2014 and that this was "the minimum that needs to be done" to ensure the public finances remain on a sustainable path.