Cuts Loom As €11bn Set For Chop

October 20 may come to be known as the 'Day of Cuts' as it is revealed €11 billion could be cut from the Irish budget, against a backdrop of major cuts being announced in the UK.

After a meeting between Government officials and the finance spokespersons from Fine Gael, the Labour Party and Sinn Féin, it has emerged the public finances are in a more dire state than first thought, and may lead to a further cut of public spending by some €11 billion over the coming years.

According to reports this morning, the party representatives were told growth over the next four years was likely to be much lower than forecast and the adjustment to the public finances would be much greater than the €7.5 billion originally announced by Minister for Finance Brian Lenihan.

Today's revelations come as Stormont's Finance Minister Sammy Wilson said he expects the NI Executive will lose £2bn of its block grant in the UK Chancellor's Comprehensive Spending Review today.

He is anticipating that, soon after today's major announcement around noon by the British Government, the Department of Finance at Stormont will work out the corresponding impact of the cuts in Northern Ireland.

The review from the new Coalition Government is expected to be the biggest programme of cuts in the UK for decades with the average reductions hitting 25% in most departments.

It is believed George Osborne's review will outline almost 500,000 public sector jobs cuts by 2014-15.

The adjustment to the Irish Government's projections have come only a day after worrying comments from the European Central Bank president Jean-Claude Trichet, stating that the there were "information gaps" in the estimation of depth of the banking crisis.

Speaking to an ECB conference in Frankfurt, Mr Trichet told delegates that the financial crisis had revealed gaps that needed to be closed while also preparing the union for future challenges.

Reacting to Mr Trichet's comments Labour MEP Alan Kelly said he believed the Central Bank President was sending a message to the Irish finance Minister that not all government statistics on banking have been reliable.

Alan Kelly said: "As far as I'm concerned the latest comments by European Central Bank President, Jean Claude Trichet, is tantamount to a warning for Brian Lenihan and the Irish banking system.

"This is a message to Cowen and Lenihan to get your house in order."

Mr Kelly pointed out that the government's first projected bail-out of Anglo Irish Bank was supposed to cost €2.5 billion and gradually rose to €40 billion.

"I have no doubt that the government have been duped by the banking sector when it comes to making its projections," MEP Kelly said.

He added: "The fact that this has happened is undermining the Euro currency which explains Mr Trichet's comments."


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