The Taoiseach Mr Ahern has sent a clear signal that significant tax reductions are not in prospect in the forthcoming Budget. He has also warned that people would have to face "hard realities" as the global economic slowdown worsens.
The need for a cautious Budget was also underlined by Mr Maurice O'Connell, the Governor of the Central Bank, who called for a prudent Budget with spending aimed at infrastructure.
Speaking yesterday as several hundred more redundances were announced, including job losses in Waterford Wedgwood and aircraft maintenance group FLS Aerospace, Mr Ahern said the Government is concerned about growth next year.
"We will have to be cautious, we will have to be careful and we will have to make sure that our fiscal and monetary policies are well controlled," he said.
Admitting the Government had to "manage through a difficult situation", Mr Ahern nevertheless pledged to continue spending on social inclusion and education but at "more moderate rates".
A clearer indication of what lies ahead will be revealed when the Government publishes the spending estimates in two weeks.
Addressing the Oireachtas Joint Committee on Finance, Mr O'Connell also cautioned that the Celtic Tiger era is now over and that the outlook for the future is for more modest rates of growth.
According to Mr O'Connell, if the downturn intensifies it would be unlikely economic growth next year could reach the 3.5 per cent the Bank is currently predicting. "The risks to this projection are on the downside," he warned.
Mr Ahern predicted that growth would fall to 2.5 per cent in the first three months of 2002. He added he would be in a better position to assess the extent of the economic difficulties once he returned from a three-day visit to the US.
Saying the world economy was "plummeting", he cited the example of Singapore which last year had the same growth levels as Ireland but was now experiencing "negative growth rates of several per cent". "Hard realities" were now sinking in and Ireland now had to handle an international slowdown, he said.
However, the economy may get a kickstart, if, as expected, the European Central Bank lowers rates today to counter the growing threat of a European recession.
Meanwhile, Waterford Wedgwood announced that more than 100 jobs in Ireland are to disappear as part of a 1,400-job global cutback. Chief executive Mr Redmond O'Donoghue has said the current business environment is the worst he has experienced in 35 years. The company employs 1,650 in the Republic.
The Taoiseach commended the company for making the redundancies voluntary. "We would be happy to see a similar approach everywhere else", he said.
Meanwhile, in a statement last night, RT╔ said its executive board proposed that "a number of in-house activities will cease, with the reduction of at least 160 posts and a significant reduction in ... freelance engagements" at the national broadcaster.
In addition, up to 200 jobs could be lost at the Dublin operation of FLS Aerospace.
The company said it will cut 150 jobs at the aircraft overhaul section of its Dublin operation as part of a plan to pare 900 jobs worldwide. Almost 100 jobs are also to go at Interface Europe, an Armagh-based carpet manufacturer, while short-time working and other cutbacks are to be introduced at the Carlow manufacturing company Oglesby & Butler.
Also in Carlow, the town's last surviving family bakery, Crottys of Tullow Street, is to close next Saturday with the loss of 15 permanent jobs as well as a number of part-time positions.