Cutbacks and tax hikes to dominate cabinet meeting

The desperate state of Ireland's public finances is expected to top the agenda today when the cabinet holds its first meeting of the new year.

Ministers are likely to discuss what kind of spending cuts and tax increases they can introduce to make up for the massive shortfall in 2008.

The Exchequer figures for the year show that government spending was €12bn ahead of tax receipts, despite the cutbacks already implemented before the end of the year.

Taoiseach Brian Cowen is planning to hold talks with the social partners to formulate a plan to overcome the difficulties, with many commentators calling for a pay freeze or even pay reductions in the public sector.