Govt's budget advisors say austerity plan should not change

The Government's independent budgetary advisors have warned against any easing of planned spending cuts and tax hikes over the next two years.

However, the Irish Fiscal Advisory Council has dropped demands for even tougher budgets than had been planned.

The coalition had hoped that savings from the promissory note deal could ease up on the harshness of the next two budgets, but the fiscal advisory council said the planned correction in 2014 and 2015, totalling €5.1bn, should not be reduced.

The council said proceeding with the plans would result in a budget deficit of closer to 2% in 2015, safely meeting the Troika target of 2.9% and would be a buffer against any economic shocks.

John McHale from the Fiscal Council has warned politicians not to be tempted to use that money to bring in a less severe budget.

"We have a very good chance of exiting the programme and really laying the foundation for recovery, I think that is enhanced by having this margin of safety in place ," he said.

"So while we absolutely understand why they may take a different view and understand the temptations, for now given the uncertainties that surround the economic outlook the best use of that money is really to put that buffer in place".

The council had been recommending billions in additional austerity measures over what the coalition and Troika had planned, but said today the case for this was no longer being made because of the improved economic position.

There is no obligation on the Government to accept the council's recommendation to implement the planned austerity measures in 2014 and 2015.