The Minister for Finance, Mr McCreevy has laid out the stark reality of the state of the Government's finances in the Book of Estimates for 2003 published today.
Mr McCreevy said that Government could only afford to increase spending by 2 per cent next year and as three areas - health, education and infrastructure - will receive modest increases, all other departments will face painful cutbacks.
Today's estimates do not even present the full picture of the public finances as the costs of any social welfare increases to be announced in the Budget nor the cost of benchmarking are included in today's figures.
Clearly the rate of Government spending was unsustainable in the current climate after increases of 23 per cent in 2003 and 15 per cent in 2002 and true to form Mr McCreevy wants to resist tax rises and instead seek cuts at the bottom line.
The Department of Health will receive euro8.9 billion in 2003, an increase of 6 per cent but with inflation in the health sector running at over 10 per cent this represents a decrease in real terms.
In remarks aimed at his colleagues in Cabinet, Mr McCreevy said it was not the Department of Finance's job to control spending but rather each minister held responsibility for their respective departments.
For example, health spending has doubled in the past five years and is now running at euro9 billion, Mr McCreevy said. The challenge for the Department of Health is to provide a service which meets public expectations and represents vale for money. Or as Mr McCreevy puts it, health spending may have doubled but people are not twice as sick as they were five years ago.
Today's measures, described as "draconian" by one economist, have already sparked a debate about the direction the Government is steering the economy.
Mr Jim Power, chief economist at Friends First, said today's measures "clearly indicate that the burden of fiscal adjustment is now on spending." Mr Power said while there is no easy medicine to cure the current situation cutbacks like today's represent "the less painful option."
However the danger remains that in an effort to trim today's bills Mr McCreevy is jeopardising tomorrow's recovery by cutting much needed capital investment.
When put in the wider context a general budget deficit of euro1.22 billion or one per cent of GDP keeps Ireland well within the EU's limits and as expected the global economy picks up towards the end of 2003 this situation should improve.
Yesterday in its economic forecast the European Commission noted Ireland's deteriorating fiscal position but added that it expected Ireland's "cyclically adjusted deficit" to improve rapidly in the expected global recovery.
At some stage in the future capital projects such as roads and broadband internet links will have to be undertaken and such investment will be more expensive in the future.
By introducing such swingeing cuts now Mr McCreevy is risking throwing out the baby with the bathwater.