This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/world/europe/8402551.stm

The article has changed 5 times. There is an RSS feed of changes available.

Version 1 Version 2
Irish Republic faces tough budget Tough 2010 Irish budget unveiled
(about 10 hours later)
The Irish government is due to unveil one of the most severe budgets in the Republic's history. The Irish government has unveiled one of the most severe budgets in the Republic's history.
It said it needs to make immediate savings of 4bn euros (£3.6bn; $6bn) to stabilise the economy after it fell into deep recession. Finance Minister Brian Lenihan announced pay cuts for public sector workers, as part of efforts to achieve savings of 4bn euros ($5.9bn; £3.6bn).
The government has said social welfare and capital expenditure will be cut. Taoiseach Brian Cowan will have his pay reduced by 20%. "Those at the top will lead by example," Mr Lenihan said.
The budget comes amid threats of industrial action by public sector workers who could face pay cuts of up to 6%. The Irish economy will shrink by 1.25% in 2010, he forecast. He had previously estimated a contraction of 1.5%.
Even members of the police force said they were considering becoming involved, after government talks with union leaders collapsed on Friday. The economy is expected to shrink by 7.5% this year, confirming a previous reading.
PM pay cut "Our economy is still in a weakened condition, and our self confidence as a nation has been shaken," Mr Lenihan said.
Irish finance minister Brian Lenihan said severe measures were needed to prevent debt growing from almost 12% of GDP - already four times the level allowed by the European Union - to 14%. "The government's strategy over the last 18 months is working and we can now see the first signs of a recovery here at home and in our main international markets."
It is thought salaries of the highest-paid public sector employees could be reduced by up to 20%. Richard Bruton, finance spokesman for the opposition Fine Gael party, called the budget "jobless and joyless".
One of those facing such a cut is Taoiseach Brian Cowen; the prime minister's pay will drop to 228,466 euros. He added that the proposed cut in the Taoiseach's pay was "simply a sham" and did not take into account previous adjustments.
But that is unlikely to appease the trade unions, says the BBC's Ireland correspondent Mark Simpson. The real cut was much lower than 20%, he said.
Since the collapse of the Celtic Tiger economy, the unions believe too much help has been given to Irish banks and not enough to Irish workers, he adds. Planned savings
It is expected social welfare payments will be cut by about 4% and child benefits by about 9%, as well as a reduction in payments to the unemployed under 23. Old age pensions are the only area to be unaffected. Mr Lenihan announced savings in 2010 of:
It is Mr Lenihan's second budget this year after he was forced in April to announce an emergency budget to deal with the Irish Republic's rapidly contracting economy. • 1bn euros on the public sector pay bill. Public servants will face pay cuts, ranging from 5% on those earning 30,000 euros to 15% on those earning more than 200,000 euros
It included a large rise in taxes and a cut in spending, as well as the creation of the National Asset Management Agency to take over banks' bad assets to try to restore lending. • 760m euros on social welfare
Union proposals to achieve savings through unpaid leave have been rejected by the Irish government, which said it would proceed with its own plans to cut 1.3bn euros off the public sector pay bill. • 980m euros on day-to-day spending programmes
• 960m euros on investment projects.
But he said the pay cuts in the public sector would not apply to existing public service pensioners.
He also reduced the rates of child benefit by 16 euros per month, bringing the lower rate to 150 euros per month and the higher rate to 187 euros per month.
And he introduced a carbon tax, equivalent to 15 euros per tonne.
Other taxation measures include switching to a simpler income tax system with just two charges on wages, and bringing VAT down to 21% from 21.5%.
Excise on beer, wine and spirits was reduced, but there was no change in tobacco tax.
Corporation tax - which has been a draw for foreign investors in the Irish Republic over the last few years - was held at 12.5%.
Lowering the deficit
The Irish deficit currently stands at 12% of GDP. European Union (EU) rules state that countries are expected to keep their budget shortfalls below 3% of GDP.
But Mr Lenihan said if it were not for action taken by the government, the situation could have been much worse.
"The government over the past 18 months has made budgetary adjustments of more than 8bn euros for this year," he said.
"Had we not done so, the deficit would have ballooned towards 20% of GDP - a level at which the very financial survival of this country would have been at risk."
He went on to say that he expects the deficit to come down over the next few years - to 11.6% next year, 10% in 2011 and to reach 2.9% in 2014, thereby reaching the EU target.
Do you live in the Irish Republic? What is your reaction to this announcement? How will these measures affect you? You can send your comments using the form below:
A selection of your comments may be published, displaying your name and location unless you state otherwise in the box below.
The BBC may edit your comments and not all emails will be published. Your comments may be published on any BBC media worldwide. Terms & Conditions