FG voices concern over 'huge divergence' over extent of proposed cuts

The Government is at odds with a leading economic think-tank over the scale of the cuts needed to restore the economy, it was warned today.

Fine Gael said the Department of Finance wanted a €7bn package of savings this year, while the Economic and Social Research Institute (ESRI) suggested €4bn.

The main Opposition party's Finance Spokesman Michael Noonan said the massive gap demanded an independent review of the Exchequer figures.

"This is a huge divergence, and it confirms the correctness of Enda Kenny's call for independent verification of all the essential figures," he said.

But in a statement, the Department of Finance said it has only announced potential scenarios, including €3bn, €4.5bn and €7bn of cuts.

Taoiseach Brian Cowen said the Government had not yet made any decisions.

"As you know, we are consulting with a whole range of international agencies and obviously the European Union as well," Mr Cowen said.

"So when we finalise this in coming days and weeks we will outline the situation in full."

The Cabinet is to meet on Monday evening and all day on Tuesday.

Meanwhile, Mr Noonan said Ireland must bring the State's Budget deficit under control by 2014 despite fears from the ESRI that the plan could stifle the beleaguered economy.

Mr Noonan said the country had no wriggle room over the EU-agreed target, which the think-tank described as worryingly ambitious.

The ESRI said it would be preferable if the Government extended the deadline for cuts to 2016.

But Mr Noonan said: "The ESRI's concern that it will be difficult to adhere to the 3% deficit to GDP target by 2014 is understandable.

"However, this is a futile debate because Ireland has no choice but to stick to this target."

EU economics commissioner Oli Rehn had made it clear the 2014 deadline must be adhered to, while Taoiseach Brian Cowen, Fine Gael leader Enda Kenny and Labour chief Eamon Gilmore understood the choices when they backed the plan, the TD added.

Sinn Feéin Dáil leader Caoimhghin O Caolain said the 2014 target was completely unrealistic and called for the Government to negotiate a new timeframe.

"This morning's ESRI report has completely vindicated the Sinn Féin position that 2014 was an unachievable target for cutting the deficit to 3%.

"I believe that the Government has known that this target is unachievable but pursued a political consensus around it in a fundamentally flawed attempt to create confidence in Ireland among international bondholders."

He said the Government was trying to soften up the electorate for a savage Budget.

In its latest quarterly economic forecast the ESRI said the Government needed to double its savings to a massive €15bn over the coming years to meet the 2014 target.

It said previous estimates that €7.5bn would have to be raised through tax hikes and spending cuts were wide of the mark.

The ESRI also predicted 10,000 more people would join the dole queue next year.

Another 60,000 people would be forced to leave the country to look for work with no prospect of any improvement for at least the next four years, it said.