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THE BODY established by the Government to advise on budget policy and planning says the country needs an adjustment of €4bn.

The Fiscal Advisory Council which reports to Minister Michael Noonan (right) said that the adjustment is needed if the state is to meet its EU-IMF programme deficit target of 8.6pc of GDP.

In its first report, the Council says that weaker than expected economic growth has knocked the Government's plans slightly off course.

They say this means the Government needs another €400m of cuts or tax rises to stay on track next year.

It says in next year's Budget the target should be a deficit of 8.4pc, implying an adjustment in cash terms of €4.4bn is now necessary.