The government is slashing growth prospects for next year to 1.5%.

But the budget correction is to remain at €3.5 billion despite the worsening forecasts.

The coalition also says employment losses have not yet bottomed out and unemployment will remain above 13% until 2015 at least.

In its medium-term fiscal statement the government is cutting the growth forecasts for 2013 by 0.75%.

This it says is entirely down to the continuing poor performance in the global economy.

That is still better than other forecasts such as one from the International Monetary Fund (IMF) last week that projected growth of 1.1%.

Budget cuts untouched

Despite the downward forecast the coalition is leaving the budget target of €3.5 billion in cuts and taxes unchanged saying that is what is needed to meet Troika deficit targets.

And it remains of the view that a further €5 billion in corrections over the following 2 years will be needed saying calls for harsher budgets by the Fiscal Advisory Council were reasonable but there is a need to support economic recovery.

The government says employment losses this year have been worse than expected and have not bottomed out.

It believes it will be 2015 before unemployment drops from 14.8% this year to 13% whcih is much worse than the 11% originally forecast.