The Minister for Finance, Charlie McCreevy, has published the Book of Estimates for next year which, as anticipated, sees a reduction on this year's public spending.

Spending is to increase by just 2%, or less than half the rate of inflation, and all departments have been affected.

Mr McCreevy admitted that there would be cutbacks in some services next year, but he said this was inevitable if the Government wanted to put resources into key priority areas.

Health will receive most of the available extra money, with an increase of 6% to €8.9 billion. However, medical inflation is estimated to be running at around 10%. Social and Family Affairs and Education are both up by 3%, to €9.7 billion and €5.6 billion respectively.

Capital spending is to be cut by 6% to €5.3 billion. Mr McCreevy said he would deal with benchmarking and social welfare rate increases on Budget Day.

The direct impact of the Book of Estimates is emerging this evening as different ministers outline the impact in their areas.

The first time buyers' grant has been abolished from today although this will not affect people who have already signed contracts. Community employment schemes are to be cut by 5,000 places.

The threshold for the drugs refund scheme is to rise. Luas trams are not now expected on the streets of the capital until 2004 at the earliest and no new road projects are to be announced.