Families with three children in the Republic of Ireland are to have their child benefit cut by €40 a month after tomorrow’s Budget. Finance Minister Brian Lenihan will today put the finishing touches on the plan, consisting of €6bn worth of spending cuts and tax increases.
Child benefit payments for the first and second child will be reduced by €10, with rates cut by €20 for the third child. Payments for subsequent children will revert to a reduction of €10, aiming to mitigate the effects of the cuts on larger families, amongst whom child poverty is more common.
Petrol and diesel prices are also expected to rise, and minimum wage will fall by €1. In addition, €1.9bn is hoped to be raised by dramatically increasing income tax bands and rates.
However, with a vote still to take place tomorrow, there is no guarantee that members of the Dáil Éireann, the lower house of the Irish Parliament, will allow the Budget to pass. With the government relying on two independent TDs to maintain its majority, the votes are crucial if the resolutions are to be passed tomorrow night.
Ireland has already agreed to an €85bn rescue package funded by EU member states and the International Monetary Fund (IMF), along with a £7bn contribution from the UK. However, the IMF is to tell EU ministers today to provide a better safety net for EU member countries hit by financial crises, and request the European Central Bank (ECB) to step up its bonds purchases.
Ireland’s financial crisis has intensified in the last weeks, threatening the stability of the entire euro zone. At the end of November, the country had a budget deficit of €13.3bn.