Minister for Finance Brian Lenihan has confirmed that next year's budget shortfall will be larger than the €4.7bn he had budgeted for.

Minister Lenihan was speaking in the Seanad this morning about the current economic crisis.

Watch his statement in full.

Budget 2009, which was unveiled by the minister in October, had predicted the current deficit of €4.7bn.

This was equivalent to 10% of the planned day-to-day spending of all Government departments for 2009.

Taoiseach Brian Cowen said it meant that 10% of the cost of paying all teachers, nurses, guards and civil servants would have to be borrowed, and that 10% of all the cost of Government programmes had to be borrowed.

Today, Mr Lenihan accepted that this deficit would be larger because the slowdown in the economy was greater than predicted.

It follows the publication of Exchequer figures earlier this week showing that the shortfall in taxes this year could be as high as €8bn - €2bn more than expected at Budget time.

The implications of the larger deficit will be even greater pressure for the Government to find savings in public expenditure programmes next year.

The minister also warned of further cuts to State agencies above those already announced in the Budget.

He emphasised the need to reform the public sector and said public pay counted for €18bn, or 32%, of public expenditure.

Further cuts in State agencies would come out of the recommendations of the newly-established body to reform the public sector, the minister said.