A report on the economy has said that cuts must be made to the State budget regardless of any deal to reduce the burden of the bank bailouts.
The report by the Economic and Social Research Institute (ESRI) suggests that Ireland's economy will contract once again this year, with only low growth likely next year.
In its latest quarterly economic commentary, the ESRI says the economy is "bouncing along the bottom" and forecasts that unemployment is set to remain high next year.
It believes this year GNP, the measure of economic activity that excludes foreign multinationals, will shrink by 0.2%, but it expects it will turn positive next year, with growth of 0.7%.
Using GDP, which is used to measure the fiscal targets set by the Troika, the picture is slightly more positive, with the ESRI predicting growth this year of 1.8%, and 2.1% next year, which is much higher than other official forecasts.
It points out that even if there was no national debt to service, there would still be a large budget deficit to close.
It says day-to-day spending outstrips tax revenues.
The weakness of the domestic economy means unemployment is set to remain high next year, and the ESRI has warned of the scale of the fiscal adjustment to come.
In response to the report, Taoiseach Enda Kenny said that it would be the Government's most challenging Budget, but one which would strive to be fair to all.
Speaking in RTÉ’s Morning Ireland, ESRI research officer David Duffy said if confidence returned to the eurozone, the effect will filter through to exports leading to growth.
Mr Duffy said they are assuming that the emigration net outflow is in the order of 35,000-40,000 per annum over the course of the forecast.
He said there is a huge need to bring expenditure and revenue back into line.
Public finances, he said, have to be brought back into a stable pattern.
On public services, Mr Duffy said a lot of the services that people avail of, such as health, are demand driven and it is very difficult to "turn off the tap in those services".
He said if pay is not adjusted the savings need to come through productivity gains.
