BUDGET 2015 will be the last of the budgets where there are major cuts to spending, senior Government figures have said.
But the Government's hopes of continued economic recovery are being jeopardised by growth in the eurozone stuttering to a halt, with setbacks for the major EU economies.
After the adjustment to be announced in October's Budget, future budgets will not be as harsh.
The Government will also be planning ahead for spending in departments, including Health, Education and Social Welfare, to be set beyond the general election.
The Coalition aims to dampen expectation of an opening of the purse strings. The expenditure ceilings will put a cap on how much will be spent in each area over the following years and give an indication of where the Government sees the priorities.
However, Budget 2015 will not be followed by any further major spending cuts, according to senior Government figures.
"It is unlikely you will see expenditure reductions in 2016 or 2017. The 2015 consolidation is the last ask," a source said.
The budget deficit next year will come under 3pc of GDP, which is the EU's acceptable level of borrowing. After that, the Government expects economic growth to provide sufficient funds to avoid having to bring in a major adjustment or go above the 3pc limit.
The current round of talks on planned spending cuts for next year will continue up until the end of August.
The annual compilation of a list of potential cuts, known as the Comprehensive Review Of Expenditure (CRE), has been conducted.
Individual departments are in discussions with the Department of Public Expenditure about their proposals.
Departments were told to come up with cuts worth 5pc of their spending. But most departments didn't respond with equivalent cuts and some even asked for spending increases.
An adjustment of €2bn was supposed to be required this year. But Finance Minister Michael Noonan (inset) has accepted the package will be lower.
The admission marks a change in approach from the minister, who insisted until late in the process last year that a full adjustment would be required.
The country's largest business body, Ibec, says the economy is well in recovery mode and an adjustment of €200m will be adequate.
The threat to the Government's plans comes from a lack of growth in the eurozone.
In the second quarter of the year, from March to June, Germany's economy contracted and France stagnated.
The latest figures come just weeks after Italy, the eurozone's third largest economy, slipped back into recession.
In another blow, eurozone GDP remained flat in the second quarter. The results caused heightened speculation the European Central Bank would have to carry out further stimulus.
Of particular surprise was the contraction in Europe's economic powerhouse Germany, which even undercut forecasts from the Bundesbank.