The austerity budget is likely to be this Irish government’s last big act, its legacy.
It will go into an election, probably early next year, as the architect of the deepest cuts Ireland will have ever seen.
Of the 15 billion euros to be saved over the next four years, 40 percent or six billion euros will be made next year alone. Two thirds of those savings will come from spending cuts while tax hikes will make up the rest.
A one-off, 30 billion-euro bank bailout this year has seen Ireland’s budget deficit jump to a staggering 32 percent. Excluding that cost, official figures put the deficit at 11.7 percent. The EU wants that below three percent by the end of 2014.
That is the austerity plan. But some economists warn that the cuts might cripple domestic demand, tip Ireland into a prolonged downturn and make the debt targets even harder to achieve.
Private sector minimum wage workers will see their pay cut by more than ten percent.
Thousands of public sector jobs will be slashed and pay frozen for those who escape the axe.
Social welfare spending is to be reduced by five percent.
Prime Minister Brian Cowen is personally taking a 14,000 euro a year cut in his salary but most observers believe that his time in office is itself numbered.