The Government needs to find higher-than-expected savings amid fears economic recovery will be slower than forecast, Fine Gael warned today.
In a bleak assessment, the party’s economics spokesman Michael Noonan said cuts of more than the €7.5bn over four years would be needed to restore the crippled finances.
Mr Noonan issued the stark warning after a confidential briefing by the Government‘s finance officials.
“You’ll recall that the figure of adjustment which was published already in the government plans was €7.5bn,” he said.
“With lower growth rates being projected, the level of adjustment is going to be significantly higher than that.”
Mr Noonan said the Government had predicted the economy would grow by up to 3.5% next year, but the briefing revealed the real growth rates would be lower than that.
“All we had today was the overview from their (Department of Finance) perspective and their overview was extremely gloomy and the level of adjustment now required is higher than any level of adjustment published in any plan to date,” he said.
Fine Gael, Labour and Sinn Féin held separate meetings at the Department of Finance to help them devise their own four-year budget strategies.
Labour Party Finance spokeswoman Joan Burton branded the confidential figures very challenging, claiming the country was in a very critical situation.
She said officials had concerns that income tax receipts would be lower than first thought as fewer people were working and others have suffered pay cuts.
“I think that what they (Finance officials) told us is very challenging,” Ms Burton said.
Ms Burton said Labour’s four-year plan would be credible.
“We will come up with a credible plan, but the credible plan can’t just be about people on low and middle incomes being asked to make all the sacrifices,” the Labour deputy leader said.
“And the credible plan can’t exclude retention and growth in employment because if it doesn’t make provision for growth, we won’t be credible with the bond markets either.”
Sinn Féin’s economics spokesman Arthur Morgan said his meeting was very constructive but said he was bound by confidentiality.
“So far so good. It has been a worthwhile and useful exercise, ” Mr Morgan said.
Taoiseach Brian Cowen, who is expected to meet the main opposition leaders later in the week to seek consensus on the Budget, yesterday hinted low-income families and those surviving on social welfare payments face a hit in the upcoming Budget.
He confirmed the Department of Social Protection will have to make a contribution towards the budgetary adjustment, with Minister Eamon Ó Cuiv stating there will inevitable be cuts in social welfare.