Fianna Fáil and Progressive Democrat sources expect a Cabinet showdown tomorrow over the proposed national stadium to be averted, but no compromise proposal has yet been agreed.
The question of whether to go ahead with the Taoiseach's vision of a new national stadium at Abbottstown is expected to be put before Ministers tomorrow. A committee of officials has failed to agree on how to proceed, and it is not known whether any report from that committee will be put before tomorrow's Cabinet meeting.
Government sources confirmed yesterday that PD and some Fianna Fáil Ministers are increasingly nervous about the project in the wake of the €300 million worth of savings and cuts imposed recently in health, education and other areas. Many now feel the project would be seen as an indefensible extravagance in the current climate.
Several Ministers are understood to believe a decision should be postponed until the current difficulties in the public finances are resolved. However, the planned joint Scottish-Irish bid to host the European soccer championships in 2008 has added urgency to the issue. UEFA officials will start a visit to Ireland next Monday to assess Ireland's suitability to co-host the championships.
They will need to be convinced - possibly during their visit but certainly before the decision is taken in December - that Ireland will have two suitable stadiums available to stage matches.
Some PD figures have argued consistently that Croke Park and a refurbished Lansdowne Road would meet UEFA's requirements. However, there is no certainty that the GAA will change its rules to allow other games be played at Croke Park, or that the IRFU would agree to a refurbishment of Lansdowne Road that could reduce the stadium's capacity.
Fianna Fáil committed itself to a new national stadium - but not the Taoiseach's original sports campus project - in its election manifesto. The Progressive Democrats also left open the prospect of a national stadium, while stating their preference for the redevelopment of Lansdowne Road instead.
The PDs have effectively won the argument over the major sports campus project initially proposed for Abbottstown. There is no question that this will proceed in the current climate. The question that remains is whether they would agree to a scaled-down stadium holding 55,000 to 60,000 people on the site.
Meanwhile the Taoiseach yesterday denied there had been any cutbacks in health. The Government had always planned a 14 per cent increase in public spending, he said, but this had risen to 21 per cent during the year. It had therefore made some "adjustments" to try to bring the figure back to 14 per cent for the year.
He said they might not be successful in keeping to the 14 per cent figure this year. He also denied that the people had been "conned" in the election campaign, maintaining his party had made it clear that there were priority areas for spending. These included social welfare, health and infrastructure.