The Cabinet will hear this morning that there is little or no room for spending increases next year.
Public expenditure minister Paschal Donohoe is bringing a memo to cabinet this morning, warning that funding the housing programme and the pay deals for public servants means few extra resources are available.
The memo says new spending priorities in departments will have to be funded by diverting funds from existing lower priority projects.
Taoiseach Enda Kenny says he doesn't want to see any existing services being cut.
"The Minister of Finance has set out the challenges that the country faces here, we've been very realistic about this.
"There's no intention of cutting back on services, but people have to be very prudent in respect of the Budget that has been set out for 2017 and we understand and appreciate the scale of challenge for 2018 also."