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Austerity fears over water charges cuts

Fears of further cuts and tax hikes have emerged as the Government's new water charges plan puts the country at risk of missing the Troika's budget target next year.

The Troika and EU officials has also been surprised at the scale of the public backlash over Irish Water, which they believed was a done deal when they left a year ago.

"The political landscape is now more challenging for the Government on all reform fronts," sources close to the European Commission said.

The next challenge for the Government is to ensure the new water charges plan passes EU spending rules.

The Government says it is confident the cost of Irish Water will be kept off the balance sheet.

However, ministers do admit there is a "risk" the water charges plan will fail.

EU officials fear not passing the test would result in spending on Irish Water counting as Government expenditure.

Under the EU financial rules, more than half of Irish Water's revenue must come from charges for it to be regarded as independent.


Sources close to the European Commission last night raised the prospect that if Irish Water is kept on the State's balance sheet, next year's vital deficit target would be missed.

Failing to hit the agreed target to get the deficit below 3pc the size of the budget would result in more austerity to get the national finances back on track.