The Fiscal Advisory Council says an adjustment of €4bn will be needed if the next Budget is to hit its European Union-International Monetary Fund programme deficit target of 8.6% of GDP.
The council is a new body established by the Government to advise on budget policy and planning.
In its first report, the council says lower than expected growth means the Government needs another €400m of cuts or tax rises to stay on track next year.
However, it thinks the rest of the programme should bring the deficit below 3% by 2015 without further measures.
The Taoiseach said the Government will consider the recommendations.
Enda Kenny said it is important that the council is allowed to do its job, but he said the job of Government is to make decisions in the best interest of the country and that is what it will do.
He said the report does deserve consideration and will get it.
