Ireland and Italy face up to harsh realities

France and Germany’s demand for a new treaty came as two of the eurozone’s most debt-ravaged countries, Italy and Ireland, were pushing harsh austerity measures through their parliaments.

Ireland’s budget has now become a three-day affair as the government attempts to introduce a decrease in public spending and an increase in taxes.

On Sunday night, prime minister Enda Kenny addressed the nation on television, the first Taoiseach in a generation to make a televised state of the nation address.

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Public spending was cut by €1.4 billion (£1.2bn) yesterday, with taxes due to rise by €1.6bn (£1.3bn) today.

The austerity measures will bring the total sliced off the government’s spending programmes to a staggering €2.2bn (£1.8bn).

The departments of health and social welfare are each losing around €500m (£429m), education €150m (£128m) and the other departments a total of €250m between them.

Knock-on effects include reduced child benefit for the third child and any subsequent children, and a reduction in the winter fuel allowance season from 32 to 26 weeks.

Income tax is expected to remain unchanged today when finance minister Michael Noonan announces plans to raise an additional €1.6bn (£1.3bn) from indirect taxes.

Public expenditure minister Brendan Howlin said: “Our country has suffered the greatest economic crisis in living memory leading to a large fall in Exchequer revenues.”

He told the Dáil that the public-service pay bill will fall by €400m (£340m) in 2012 and the number employed in the public service will be less than 300,000 by the end of this year.

The overall cost of paying public servants will fall by €3.5bn (£3bn), or 20 per cent, over the seven-year period from 2008 to 2015.

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Meanwhile, Italy’s new prime minister, Mario Monti, presented lawmakers with his proposal for €30bn (£25.7bn) in new taxes and spending cuts yesterday, saying the “painful measures” would end the country’s crisis.

Mr Monti spoke to the lower house of parliament a day after his cabinet adopted what he has dubbed a “Save Italy” decree.

He said: “We are aware that the measures mean sacrifices. But not making the sacrifices today would mean making more painful ones in a few weeks, maybe even in a few days,”