Ireland prepares for 'most austere Budget in history'

Ireland was bracing itself today as the Government prepared to unveil the most feared budget in living memory.

The massive €6bn cost-cutting package is expected to slash social welfare, including jobseekers and child benefit, in a bid to cut public spending.

Speculation has mounted that public sector wages will be capped and ministers' salaries cut as the Government takes on a four-year battle to restore the state's crippled finances.

Public spending will be reduced by €4.5bn while taxes will raise an extra €1.5bn.

Taoiseach Brian Cowen's shaky coalition will try to impose the cuts with only a two-seat majority.

The embattled Government received a boost yesterday after an independent Tipperary North TD Michael Lowry said he would put the country first despite a potential backlash from his constituents.

The veteran politician said that after talks with the government he was satisfied that the old-age pension would be protected, along with free travel and electricity for the elderly.

Mr Lowry said his fellow backbench independent, Kerry's Jackie Healy-Rae, was also expected to back the Budget, due to be unveiled in the Dáil by Finance Minister Brian Lenihan mid-afternoon.

The potentially savage package comes just over a week after the government revealed it was taking an €85bn bailout from the International Monetary Fund and European Union.

Mr Cowen's crippled Coalition government has suffered widespread criticism for the move by a public angry at the perceived surrender of the State's hard-won economic sovereignty.

The €6bn package is the first phase of a four-year budgetary road map to raise €15bn and plug the gap in the beleaguered economy.

Opposition party Sinn Féin accused Mr Lowry and Mr Healy-Rae of engaging in the worst kind of parochial politics.

Any potential excise and duty changes, including the price of petrol and alcohol will come into force from midnight and will have to be voted on in the Dáil after the Budget is unveiled.

The Social Welfare Bill, which gives legal effect to any Budget changes in the dole or child benefit, is expected to be voted on by the end of the week while the finer details of the plan will be debated in the Finance Bill in the new year.

The Budget marks the fourth time since October 2008 that the Fianna Fáil/Green Party coalition Government has been forced to introduce harsh measures to tackle the black hole in the public finances.

Lobby groups made a last-ditch plea to Mr Lenihan to either save or make specific cuts, with the Irish Heart Foundation calling for a hike in the price of cigarettes.

But businesses said any price jump would lead to a corresponding increase in smuggling and damage retailers.