ESRI professor says tough budgets need to continue until 2015 'at least'

A research professor with the ESRI is warning the government against putting an immediate end to austerity in Ireland.

John Fitzgerald says Ireland needs at least one more austerity budget this year before the government eases up on cutbacks - or else we will not exit the bailout programme as planned.

It comes following a speech by the President of the European Commission Jose Manuel Barosso in Brussels yesterday in which he said austerity is not working.

John Fitzgerald says Mr Barosso was directing his comments at countries like Germany and France - and says the government needs to continue with tough budgets until 2015 at least.

"If they announce tomorrow that they are not going to do anymore, you would see a significant rise. Interest rates would go up, not just for the government and SMEs but for people who want to buy houses and so on.

"That would push things into reverse, it's too early to make sucha commitment."