The Government's mid-term economic review, published this afternoon, says €3.8bn worth of spending and tax measures are now planned in the forthcoming Budget.

Click here to read review in full

The adjustment planned for Budget 2012 is €200m more than thought earlier this year, mainly because of lower than expected growth next year.

There will be a €1.6bn adjustment from increased taxation measures, including €1bn from new tax measures.

Spending cuts will account for €2.2bn, including a further €750m reduction in capital spending.

This year's adjustment is part of €12.4bn of measures to be taken over the next four budgets to bring Ireland's deficit below the target of 3% of economic output laid down by the European Union/International Monetary Fund programme.

The review says spending cuts will account for €7.75bn of the four-year total, with €4.65bn coming from tax measures.

It says the Government will try to implement the measures in a way that will not hamper economic recovery.

The main reason for the increase in the size of this year's adjustment is the fall-off in economic growth in Ireland's main trading partners over the past few months, leading the Government to revise down its estimate of growth next year from 2.5% to 1.6%.

It has also lowered its average growth forecast for the following three years, from 3% to 2.8%. The economy is expected to grow by 1% this year.

The review says the implications of weaker growth for the jobs market are "a matter of particular concern".

It estimates that employment will have risen by only 65,000 by 2015, leading to only a modest fall in the unemployment rate to 11.6%.

The Government says it will publish further details about the tax and spending measures planned from 2012 to 2015 in December's Budget, adding that it wants to help rebuild business and consumer confidence by providing clarity about its future plans.

The review warns that the tax take for this year could fall short of the target by around €450m due to weakness in some areas, notably VAT. But it says the overall deficit for this year is expected to be 10.3% of GDP, within the target of 10.6%.

The review says the Government is aiming not to make any further substantial changes to income tax in the Budget, as it says taxes on employment should be kept to a minmum.

The Programme for Government commits it to maintaining current income tax rates, bands and credits.

The document says the Government is looking at VAT, excise duties and carbon taxes to see how tax revenue can be increased.

8.6% target is 'sacrosanct' - Noonan

Answering questions from journalists at the Government Press Centre, Minister for Finance Michael Noonan said the the target of 8.6% for the debt to GDP ratio for 2012 has always been "sacrosanct" and that is why an additional €200m adjustment is needed.

Mr Noonan said that at this stage of the year everything is "subject to tweaking" ahead of Budget day.

He said the Government believed that the necessary adjustments can be made without touching income tax in 2012 and he is fairly certain that it will not have to touch tax rates, band or credits.

Basing forecasts on "best available information", Mr Noonan said he was confident growth rates will match expectations in our main export markets, such as the US.

Mr Noonan said the rates of growth pencilled into the review are "reasonable, middle of the road assumptions".

The minister said the cuts will be "real", but hoped that people will be able to say after the Budget that "at least it's fair".