IRELAND faces at least a decade of austerity because of strict European rules on slashing debt, former Taoiseach John Bruton has warned.

Mr Bruton (inset), who was once Finance Minister and now speaks on behalf of Ireland's financial services centre, said we may not even be experiencing austerity yet.

At present we are still borrowing, adding to our already massive debt mountain. Under European Union rules, we will soon have to begin living within our means.

The ex-European Union ambassador to Washington said the Irish people had signed up to the strict budgetary rules when we passed the Lisbon Treaty in 2009.

Under the Lisbon Treaty, countries must reduce their debt levels to 60pc of the value of the economy. The national debt in Ireland peaked at almost 124pc of gross domestic product last year.

Mr Bruton said Ireland would have to take in more than it spends for several years to meet the targets laid down in the rules.

"It's only when you're taking in substantially more than you're spending that you're experiencing austerity," he said.

"We haven't reached that point yet. We will be doing that for about the next 10 or 15 years in accordance with the commitment that we made under the fiscal compact," he told the Dublin Chamber of Commerce event.

His comments came as Finance Minister Michael Noonan said the Government would not ease back on cuts in October's Budget.

Mr Noonan said it was too early to know whether he would implement the €2bn in cuts agreed with our creditors. "We'll have a better idea as the summer goes by of what the quantum of adjustment necessary is," Mr Noonan said.

Separately, economist Jim Power called for a "neutral Budget", claiming plans to take €2bn out of the economy did not make sense.

"I think it would be very ill-advised to take €2bn out of an economy that is still fragile."

Irish Independent