Cowen refuses to rule out €7bn hit in cuts and taxes

THE spectre of a savage €7bn package of spending cuts and tax rises in the budget emerged last night.

The Taoiseach refused to rule out emergency measures reaching that scale, despite it dwarfing all previous predictions and coming in the wake of a major ESRI warning that the Government’s “front-loading” fiscal agenda threatens to keep the nation mired in recession.

The Cabinet will meet on Monday and Tuesday to try and get a grip on the deteriorating economic situation as attention once again focused on whether the Croke Park public service pay deal would be able to withstand the pressure on the Exchequer, as unions insisted it must be respected.