Trade union leaders yesterday strongly criticised the Budget and said it would make a new national partnership deal more difficult to achieve.
They claimed it had left workers worse off and, unless employers were prepared to "cough up" significant pay increases, a deal would be impossible to achieve.
They also said the Minister for Finance, Mr McCreevy, was mistaken if he believed payment of the benchmarking pay rises to public servants would be enough to secure an agreement.
The extent of union anger about the Budget became apparent at a meeting of the Irish Congress of Trade Unions' executive committee in Dublin.
Mr David Begg, the general secretary of Congress, said after the meeting that the Budget had made the conclusion of an agreement more difficult.
"In particular, the failure to index tax rates and to protect workers from inflation means that pay negotiations with the employers will now be more difficult," he said.
The Budget had increased both direct and indirect taxes on workers and failed to adequately address any of the critical issues in the social policy area, such as health and housing, he added.
"Congress will now be seeking clarification from Government and employers about whether they are serious about negotiating an agreement that will protect workers' living standards in the current period."
Mr Jack O'Connor, the vice-president of SIPTU and a senior negotiator for private sector workers, disputed Mr McCreevy's assertion that the Budget would leave inflation at 4.8 per cent and on a "downward trend".
Mr O'Connor said the measures announced on Wednesday would take inflation above 5 per cent and, as a result, had effectively widened the gap between employers and unions.
"What we have been looking for from the start is to maintain the living standards of our members and improve them where possible. In that respect our position has not changed."
However, increased inflation and a range of "stealth taxes" had combined to leave workers worse off. It was now up to employers to "cough up" pay increases to compensate.
However, IBEC, the employers' representative body, continues to insist that a pay pause followed by pay rises in low single figures is all that its members can afford.
Mr O'Connor said concern that Mr McCreevy appeared to believe that payment of benchmarking would secure an agreement had been shared at the Congress meeting by public sector unions, who recognised it would require much more than that.
Another Congress executive member, Mr Michael Coffey of the Federated Union of Government Employees, which represents non-clerical civil servants, said a partnership deal would now be "more difficult to sell" to members.
Senator Joe O'Toole, the president of Congress, said he was "quite despondent" about the prospects of an agreement following the meeting.
He told the RTÉ News at One programme that if a pay deal was not done by Christmas, there would not be one, as the PPF expired in a number of sectors on January 1st.
If there was no deal, a number of large companies in the private sector could expect headline pay claims that would "effectively set the trend for everyone".
