THE finance minister Michael Noonan has confirmed €2.5bn is to be taken out of the economy in the Budget and not the projected €3.1bn.
His statement ahead of a Cabinet meeting this morning confirms the Irish Independent’s story from earlier.
Mr Noonan said that resurgence in the economy will make up the rest of the money required - the overall adjustment will remain at €3.1bn.
Asked how much “wriggle room” he has the Minister replied: “We have a good bit.”
“Somewhere north of €2.5bn because of the significant savings that are coming through. When we add that to the corrections on expenditure and the tax increases we’ll be over €3.1bn.
“We cannot achieve our targets by not going the full way to €3.1bn because there are other savings in the system that can be reckoned as part of the adjustment. If you put the extra savings in and add them on you’ll have in excess of €3.1bn but if you strip those extra savings out and simply add the tax increases to the expenditure cuts it comes in slightly ahead of €2.5bn.”
Earlier, the Irish Independent had reported that class sizes, garda numbers and proposed free GP care for children under five will be in the firing line in next week's Budget, unless major cuts in social welfare are delivered.
Social Protection Minister Joan Burton is coming under intense pressure to deliver a raft of social welfare reforms – or jeopardise a coalition deal on a reduced €2.5bn Budget.
In a compromise between Fine Gael and the Labour Party, the package of spending cuts and tax cuts in Budget 2014 will now be "close to €2.5bn".
But Fine Gael is issuing a stark ultimatum to Labour to force Ms Burton to implement the bulk of her cuts of €440m.
Fine Gael is saying the savings in the Budget will be used for job creation – and not to prevent cuts in the Department of Social Protection.
Senior party figures believe Ms Burton is exploiting Labour's opinion poll woes to ramp up pressure on Tanaiste Eamon Gilmore to reduce the agreed level of cuts.
Sources close to the Budget negotiations say there is a fear among Fine Gael ministers that the internal dynamic in Labour is resulting in a lack of tough decisions being taken in social welfare.
The shape of the Budget is now agreed, but informed sources say "battle lines have been drawn" over who benefits from the extra wriggle room.Fine Gael is willing to give Ms Burton some leeway in coming up with cuts.
But source say the party will not allow her to "take the lion's share of the extra flexibility so she can avoid politically difficult cuts in social welfare spending".
"This would mean that Justice, Health and Education meet their original savings targets, requiring, among other things, an increase in the pupil teacher ratio, reducing garda strength from 13,000 to 12,500 and the shelving of free GP care for the under fives," a senior source said.