More cuts as Irish Republic's budget is unveiled

The Irish government is set to announce a series of tough measures

The Irish government has started to outline a fresh round of austerity measures, with the beginning of a two-day budget announcement in the Dail (Irish parliament).

Public Expenditure Minister Brendan Howlin has announced spending cuts of more than 1 bn euros.

The Finance Minister Michael Noonan will make the main budget speech on Tuesday.

He will outline a series of tax rises including an increase in VAT to 23%.

This could lead to more Irish shoppers travelling to Northern Ireland.

The two-day budget - aimed at saving 3.8bn euros - is the first from the new coalition government in Dublin.

Mr Howlin told Irish MPs: "Our country has suffered the greatest economic crisis in living memory leading to a large fall in Exchequer revenues."

He also touched on the crisis in the eurozone, saying: "Twelve months ago we were Europe's problem. Now problems in the European and global economy threaten our recovery."

Mr Howlin told the Dail that the public service pay bill will fall by 400m euros in 2012.

The number employed in the public service will be under 300,000 by the end of this year.

The overall cost of paying public servants will fall by 3.5bn euros, or 20%, over the seven-year period from 2008 to 2015.

The Implementation Body Public Service Agreement (2010 - 2014) estimated the public service pay bill for 2011 to be around 15.71bn euros.

Next year, the government plans to reduce the size of the public service by a further 6,000.

"By any standards, this reduction of 37,500 or 12% of staff, against 2008 levels, by 2015, is significant and poses enormous challenges," said Mr Howlin.

Mr Howlin said there would be some limited recruitment in the public sector in early 2012.

Third level student contributions will rise by 250 euros.

Students currently pay a maximum of 2,000 euros.

Other measures announced by the public expenditure minister include: 543m euros cut in health, 475m euros cut in social protection, a cut of six weeks in the fuel allowance and a reduction in child benefit for third and subsequent children.

The Justice Minister Alan Shatter revealed that 31 Garda (Irish police) stations will close throughout the country.

There will be a reduction in the public opening hours of 10 other police stations in the Dublin area.