FINANCE Minister Michael Noonan gave the clearest indication yet that his October Budget will ease off on the pace of austerity.
Mr Noonan said today that there is some flexibility on the severity of tax hikes and cuts due in next month's budget.
"We don't want to impose any hardship that isn't necessary," Finance Minister Michael Noonan told Newstalk radio. "The Europeans are very insistent that we meet the targets but there is a little bit of flexibility and we will work in that space to bring forward the best budget possible."
Taoiseach Enda Kenny said on Friday evening that any extra money will be spent on education and job creation schemes.
Mr Noonan’s comments are sure to encourage those who fear cuts or tax hikes but are certain to annoy some international lenders who are supporting the economy by lending more than €1bn a month to Ireland to pay for government services.
The International Monetary Fund, Ireland's central bank and, most recently, influential ECB Executive Board member Joerg Asmussen have all said the money should be held to cushion the weak Irish economy against any shocks ahead of an expected exit from the bailout later this year.