Minister for Finance Michael Noonan has appealed to the public to stay on the Government’s side as it prepares a budget that will “be hard on people”.
Speaking at the publication of the Government's Medium-Term Fiscal Statement, Mr Noonan said that cuts of €3.8 billion would be required to bring the deficit down to 8.6 per cent of GDP next year - a figure set out in the agreement with the bailout troika that he described as "sacrosanct".
The €3.8 billion figure has been revised upwards by €200 million as a result of downgraded growth forecasts.
Mr Noonan said that, although the outlook was largely positive, recent developments in the euro zone had led his department to downgrade Ireland's growth prospects next year to 1.6 per cent - down from a 2.5 per cent target set in April of this year - and at an average of about 2.8 per cent over the following three years.
"A key reason for the downward revisions is that the outlook for the global economy has deteriorated in the intervening period," he said, adding that the targets were "reasonable, middle of the road assumptions".
Mr Noonan said the €3.8 billion figure would be arrived at through €2.2 billion in expenditure cuts and €1.6 billion in taxation measures - €0.6 billion of which would come as a result of measures enacted in the last budget.
"These cuts are real. One person's cut is another person's public service. We are not making light of this," Mr Noonan said. "We are asking the people to stay with us because we have a clear plan for getting the country out of the difficulty it is in."
Mr Noonan said that with the important November tax returns - which include payments from self-employed people and many corporations - still to come the final figures for the budget remained open to a degree of "tweaking".
He said he believed the €3.8 billion target could be reached without increasing income tax levels in 2012 - pointing to the introduction of the €100 household charge and rising carbon charges as opportunities to make up the taxation target.
Asked if cuts of €750 million to the capital budget spelled the end for proposals such as the Metro North rail project, Mr Noonan said he would leave it to ministers at the various departments to announce if projects were going to progress or not. He said it was better to end to large scale capital projects sooner rather than later.
Mr Noonan said he expected the State's general debt to peak at 118 per cent in 2013 and that he hoped it would stand at 113 per cent by 2015 providing no unexpected measures came into play.
