The Minister for Finance, Mr McCreevy, has defended himself against criticisms of public spending restrictions.
Speaking to RTÉ before the Institute of Taxation annual dinner, Mr McCreevy, referring to controversy over tightening hospital budgets, said the Government was trying to align public expectations with a new reality. "If inflation goes up by 2 per cent, we'll lose jobs and markets," Mr McCreevy said.
"All Government agencies must live within the allocations given to them. If they don't, we will lose competitiveness and therefore jobs. If Ireland is out of line with Europe, we'll lose out double," he said.
Mr McCreevy said there was more spending in health than in any other area. "We are now living in different circumstances, trying to align public expectations with this new reality," he added.
The Irish Times revealed on Thursday that the Mater Hospital in Dublin is facing an effective 12 per cent cut in funding for 2003, which could result in up to 11,000 fewer treatments being offered to patients.
On Wednesday, the Labour leader, Mr Pat Rabbitte, told the Dáil of a memo sent to senior management in Beaumont Hospital last week warning of a €21 million shortfall by the end of this year if it does not make cuts.
Dramatic cuts in services are being considered, including cancer and dialysis services.