Lenihan signals savage budget ahead

THE upcoming budget will be even more vicious than feared, Brian Lenihan last night signalled as he braced the nation for cuts of up to €4 billion.

The Finance Minister insisted the previous target of slashing €3bn from Government spending was just a minimum figure and even more fiscal pain could be coming down the line.

Mr Lenihan issued the warning at a Fianna Fáil parliamentary party gathering in Galway which was heavily attacked by the opposition for promising a new emphasis on job creation but only delivering “talk”.

With frantic negotiations already under way within Government over where the axe will fall in the December 7 budget, Mr Lenihan raised the stakes dramatically by making it clear that the stated aim of cutting services by €2bn and saving a further €1bn on the capital building programme may well not be enough.

The escalating cost of the bank bailout has also increased pressure on the Exchequer, with influential international commentators such as the Financial Times strongly criticising the Government’s handling of Anglo Irish Bank.

Fine Gael and Labour seized on the greater than expected tax rises and cuts now being considered as proof the Government was badly adrift or that it was cynically “softening-up” voters so the final budget would seem less bad, but Mr Lenihan insisted he was in command of the situation.

“What I’ve made clear… is that the figure of €3bn is the minimum. But again the Government will have to… look at what can be saved.”

Pressed if there was a maximum amount that could be withdrawn from the economy without doing damage, Mr Lenihan pointed to the €4bn achieved in the last budget: “Last year we were told by many in the opposition… that in seeking the €4bn we would in some way damage the economy but in fact… there has been economic growth this year so that’s the balance the Government has to draw.”

The grim warning came as the Government was under fire for failing to tackle unemployment as dole queues top 466,000.

Fine Gael finance spokesman Michael Noonan said welfare recipients and the vulnerable would pay for the bank bailout “with larger cuts than they had been led to expect”.

Taoiseach Brian Cowen said there are more in employment now than this time 10 years ago and vowed to focus on “competitiveness and productivity” with a tourism and investment policy to be published shortly.

Ministers rallied around the beleaguered Taoiseach at the “think-in” with Dermot Ahern and Mr Lenihan insisting FF backbenchers were not urging them to force a change of leadership ahead of the next election.


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