DUBLIN The Irish government will not be swayed by political pressure to ease back on one last bout of austerity, which it needs to implement to hit fiscal targets mandated by Brussels, its finance minister said.
As members of the Labor party - the government's junior coalition partner - called for a change in economic direction following an election drubbing, Michael Noonan said he would have limited leeway to sweeten planned budget cuts.
"We'll have a better idea as the summer goes by of what the quantum of adjustment necessary is," Noonan told a news conference.
"But these things are governed by the new fiscal rules in Europe so there isn't that much domestic discretion regardless of what the political pressures are to vary from the targets."
Noonan needs the support of Labor to push through one last 2 billion euro ($2.7 billion) austerity budget in October.
But the party's leader, Deputy Prime Minister Eamon Gilmore, acceded to members' calls to quit on Monday after a hammering at local and European elections as voter frustration over six years of relentless austerity boiled over at the ballot box.
Ireland has taken almost 30 billion euros, or close to 20 percent of annual output, out of the economy since 2008 - with some of the more painful measures like introducing property and water taxes left for the Fine Gael-Labour coalition to implement when it came to power three years ago.
While Noonan's Fine Gael party surprisingly fell to second place in the local polls, centre-left Labor captured just 7 percent of seats compared with a record 19 percent at parliamentary elections three years ago.
One of the eight Labor party members who submitted a motion of no confidence in Gilmore's leadership before his resignation said the government needed a new vision following the end of its international bailout last year.
"I think in some circumstances we took decisions and accepted those decisions because the elephant in the room was the troika (of international lenders)," Aodhan Ó Riordain told national broadcaster RTE.
"...Once the Troika left and the immediacy of the economic catastrophe had abated just a little a bit, we had an opportunity to move forward and have a new vision."
Prime Minister Enda Kenny stressed on Sunday any hope of easing the budget cuts depended on the strength of the economy and Noonan said tax, spending and employment data pointed to a brighter fiscal picture so far this year.
However the head of Ireland's independent fiscal watchdog, which must endorse the government's budget forecasts, said there had been little substantial change in the outlook since Dublin reaffirmed planned tax increases and spending cuts.
Noonan's department confirmed last month that although the government was able to ease up on the scale of austerity in its last budget, the 2 billion euros identified for 2015 was still needed to reduce the deficit below an EU target of 3 percent of gross domestic product next year.
Irish Fiscal Council Chairman John McHale said any signs of that target not being met could see Ireland's borrowing costs rise from the record lows they have fallen to in recent months.
"The view of the Fiscal Council is that it's important to stick to that 2 billion adjustment. It's critical to meet that target of below 3 percent and not meeting it would be a blow to Irish credibility," McHale told Reuters.
"Even though we've made a huge amount of progress in terms of restoring the borrowing capacity of the state, it is still very fragile and any signs post-elections that we were backtracking could lead to an unravelling."
(Editing by John Stonestreet)