The Minister for Finance has strongly indicated that the 9% rate of VAT for the hotel and tourism industry, which was reduced from 13.5% last year, will rise in his forthcoming Budget.

Speaking in Limerick Michael Noonan said the cut was brought in as a temporary measure and both the Department of Finance and Revenue had built its restoration into their Budget figures.

He said he is aware of considerable lobbying from both those in the restaurant sector and from councillors across his own party calling for the 9% rate to remain.

Mr Noonan said that if it was maintained he would have to find €360 million elsewhere.