The report of the Special Group on Public Service Numbers and Expenditure Programmes proposes cuts in almost every area of government spending.

Two decades after his first report on public service cutbacks, economist Colm McCarthy, Chairman of Special Group on Public Service Numbers and Expenditure Programmes, also known as An Bord Snip Nua, publishes a report containing measures designed to save the government some €5.3 billion euro annually.

The report outlines cuts in social welfare payments, and spending in health and education. It suggests the merger or abolition of scores of state agencies and doing away completely with one government department.

The recommendations spell pain for every sector and every citizen.

An Bord Snip Nua was established by the government in November 2008 to deal with an economy contracting at an unprecedented rate. Colm McCarthy says the report is necessary as the current level of government borrowing is unsustainable and cannot be allowed to continue.

Minister for Health and Children Mary Harney acknowledges the challenges the recommendations pose to her area.

None of them are going to be easy and I have to engage with the HSE in relation to the do ability either to come up with these kind of savings or alternatives to those savings.

An Economic and Social Research Institute (ESRI) report issued shows there are some grounds for optimism. Alan Barrett believes by the middle of 2010 the economy should have stopped contracting and there will be a weak return to growth.

It is over now to the politicians as they face once in a generation decisions about our economic future.

An RTÉ News report broadcast on 16 July 2009. The reporter is David Davin-Power.