OPPOSITION REACTION:THE CUTS announced by the Taoiseach in the Dáil are a "€2 billion sticking plaster designed to cover a gaping wound that has not been treated at its roots", Fine Gael leader Enda Kenny said in criticism of the proposals.

He said Brian Cowen "is a leader without credibility and a Taoiseach without a mandate". Mr Kenny told the Dáil that the Government had spent the past two months "outsourcing" decision making to the social partners. "It is a most disgraceful abrogation of a leader's responsibility."

He said Fine Gael was prepared to support the Government "in the sense that if he is prepared to listen to the proposals that this party forwards in terms of tax, job creation, public service reform and cutting the public pay bill, it will not be found wanting".

The Fine Gael leader also said "as a result of two months of wasted time, the Government's vessel is holed below the waterline", and in that time €3 billion was added to the national debt.

He said that "public coffers have been emptied, the developers and the banks are bust, and trade unions have little to offer. The game is up, the Taoiseach's strategy has failed and his network of power and patronage is disintegrating around him."

He asked: "Where are the decisions to break up the cosy relationships between Ministers and senior civil servants that conceal waste in departments, evade scrutiny, duck responsibility or reward gross failures with golden handshakes?"

Labour leader Eamon Gilmore said there was nothing in what the Taoiseach said "that tells people how the proposal will impact upon their jobs, businesses or income. The pension levy was not new but the impact on a garda or nurse on €45,000 a year would mean an additional €3,375 on top of €5,000 in tax.

"If the only place you are looking to address this crisis is on the expenditure side, then you are leading the country into a downward spiral that will only make the problem worse," he said.

"That is where the Labour Party has its biggest fundamental difference with the way the Government is dealing with the country's economic problems."

The Government was "fixated solely with the public expenditure side and that it is not addressing the need to generate employment, get the economy moving, get people spending and get revenues buoyant again". He said "you did not start the talks until after Christmas. [ They] ran up until the 11th hour before you put your proposals on the table and imposed a deadline. What did you expect?"

Mr Gilmore said the Taoiseach was missing an opportunity. "The people are ready to put their shoulder to the wheel to get our economy out of its current difficulty", but "they expect leadership from the Taoiseach . . . You have disappointed in failing to provide that leadership.

"The country expected you to come to the House to announce details of the Government's decision. The country expected you to have a road map, not just about how you would deal with the public finances for 2009 but about how you would get us to the point in 2013 when the public finances would be back in order."