The Government will have to tighten the purse strings in a forthcoming budget due to the dramatic downturn in the economies of both Ireland and the world, the Taoiseach, Mr Bertie Ahern, said today.
Mr Ahern gave the warning after official figures yesterday showed the Minister for Finance Mr Charlie McCreevy would have borrow heavily to maintain spending levels and tax cuts.
Speaking in Dublin, the unveiling of a plague to commemorate the 75th anniversary of the Fianna Fáil inaugural meeting, Mr Ahern said there would be less cash to go around in Wednesday's budget.
He said: "I think the budget is a bit more predictable than usual. Clearly, as has happened in every country, the downturn in economic activity has meant that there is less money around."
He said revenue increases expected this year will be well below the 12.2 per cent expected, putting the revised increase predicted at two or three per cent.
He added: "In money terms the revenues that we will have taken in this year, as against what we thought, are probably about £2 billion of a difference."
But he reassured the less well-off and those on the minimum wage that the budget would be targeted at supporting them.
But Fine Gael’s finance spokesman, Mr Jim Mitchel said the downturn could not be blamed for all the economic problems in the country.
He said Mr McCreevy's Book of Estimates was "flawed and incomplete".
Meanwhile the Labour Party's finance spokesman, Mr Derek McDowell, called for low wage-earners to be taken out of the tax net and for a proportion of the national pension fund reserve to be spent on services for the elderly.
Speaking at the launch of the party's pre-budget proposals he also said Labour would borrow up to IR£1.2 billion next year to fund investment in infrastructure.
PA