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Ireland goes for £5bn budget cut to avoid bailout

Move aims to reduce deficit to 9 per cent of GDP.

The Irish government plans to slash the budget deficit by 6bn euros (£5.2bn) in 2011 as the nation fights to save its economic independence.

The move was aimed to try and reduce the deficit to 9.25-9.5 per cent of the GDP, Irish Finance Minister Brian Lenihan said in a statement issued in Dublin today.

By 2014, the government wants to reduce the deficit to 3 per cent of the GDP.

Taxpayers face 1.5bn euros in extra levies next year while state-run services and benefits will be cut by 4.5bn euros.

The Finance Minister said the cuts were "deemed necessary and will underline the strength of our resolve and show the country is serious about tackling our public finance difficulties".

"But our spending and revenues must be more closely aligned. This is the only way to ensure the future well being of our society," Lenihan said.

The government last month said it needs 15bn euros of savings over the next four years to reduce its deficit to 3 per cent of GDP.