A key elements in the Irish Budget announced yesterday was cuts of more than €1 billion in public service pay, a reduction of €760 million in social welfare - and just under €1 billion on day-to-day spending and the same amount on capital projects.

This is expected to have a significant impact on new build and existing infrastructure projects across the State, despite the recession and its continuing impact on the overall construction industry.

The Dáil will today debate the move along with cuts in social welfare rates when it discusses legislation to enable measures outlined in yesterday's full Irish Budget.

It also saw public servants and social welfare recipients being hit by €4 billion in spending cuts announced by Minister for Finance Brian Lenihan.

Reaction has been largely negative with the Opposition claiming the Budget was not 'fair' and public service unions threatening further unrest.

However, the Minister for Social and Family Affairs, Mary Hanafin said the cuts in social welfare would not have a severe impact - as the increases in last year's budget still existed.

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From January 1st, public servants will suffer a cut of 5% on the first €30,000 of salary, 7.5% on the next €40,000 and 10% on the next €55,000.

Social welfare recipients face an average reduction of 4.1% with those under 25 facing much more substantial cuts.

Child benefit will be cut by €16 a month with families on social welfare being compensated through an increase of €3.80 a week in the qualified child allowance.

A vote is expected tomorrow following a debate in the Dáil today.

Meanwhile, NI retailers will look with interest at efforts to curb cross-border shopping, which saw Mr Lenihan reduce excise duty on alcohol by 12 cent on a pint of beer, 14 cent on a glass of spirits and 60 cent on a bottle of wine.

He also announced a reversal of the half per cent increase in VAT imposed in his first budget last year.

In the North, while the NIO Secretary of State Shaun Woodward has welcomed yesterday's Pre Budget Report from Chancellor Alistair Darling, not everyone is quite so upbeat.

The Secretary of State said: "This Pre Budget Report is good for Northern Ireland.

"While these are challenging times, the government is determined to give real and practical help to families and businesses in Northern Ireland as we secure recovery, accelerate growth, and create jobs.

"Northern Ireland will benefit from this Pre Budget report by an additional £28m over the next two years," he claimed.

The Stormont Finance Minister Sammy Wilson was cautiously welcoming and said he is relieved that the Treasury is not going to cut the block grant they give to the Northern Ireland Executive.

It had been widely suggested that the Chancellor would use Wednesday's report to cut the amount of money allocated for devolution in NI, but the Chancellor also confirmed in his report that NI is to get an extra £28m.

NI Finance Minister Sammy Wilson said that in fact, "most of the measures" announced would have "little impact" on the people of Northern Ireland.

(BMcC/KMcA)