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Reality bites: Watchdog warns on tax hikes and pension age as recession kicks in

Coalition parties warned of 'difficult choices'

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Heather Humphreys. Picture: Steve Humphreys

Heather Humphreys. Picture: Steve Humphreys

Heather Humphreys. Picture: Steve Humphreys

The next government will have to consider tax hikes and spending cuts to deliver an economic recovery, the State's budget watchdog has warned.

With unemployment close to 30pc and the cost of the State's emergency measures now at over €13bn and rising, Fianna Fail, Fine Gael and the Greens are this weekend being told to reconsider the "very risky" proposal to keep the pension age at 66, as well as look at increases in property and inheritance taxes in programme for government talks.

The dire warnings came from the chair of the Irish Fiscal Advisory Council, Sebastian Barnes, who said the State is now facing the "most dramatic" recession in its history. His comments came as it emerged yesterday that the Department of Education's most senior official has raised major doubts about being able to reopen schools in September.