The shape of December's Budget is expected to dominate proceedings when Ministers meet in all-day session at Government Buildings today.
But Government sources last night warned that the meeting, one in a series of all-day sessions to discuss the Budget, was taking place against a background of increasing uncertainty and changing international circumstances.
No detailed picture is likely to emerge today on how the Minister for Finance, Mr McCreevy, intends to allocate a £500 million-plus package of tax reductions on December 2nd, although sources said the Government still intended to focus the bulk of benefits on the lower-paid.
But Mr McCreevy is understood to believe the 46 per cent tax rate must not be ignored and should also be reduced.
Against the background of growing unrest among nurses over pay, and union insistence that the Government deliver on promised tax cuts, sources said that to avoid wage inflation, the Government had no option but to press ahead with its commitments on tax reductions.
"They would rather have tax cuts than wage inflation," a source added.
The financial crisis in Asia, the trauma facing Russia, uncertainty in the US over President Clinton's predicament and the forthcoming German elections are being cited as examples of international instability that could affect the Republic's budgetary policy and require spending restraint.
"The Government's hands are tied with the advent of the euro, with the Central Bank no longer controlling interest rates. The Government has also given assurances to the European Commission that the December Budget will be non-inflationary," a source said.
The normal bilateral meetings between the Minister for Finance and his Cabinet colleagues have not begun as Mr McCreevy is still examining the Estimates submitted by each Department.
In addition to the Budget, Cabinet will also hear a report from the Minister for Public Enterprise, Ms O'Rourke, on public transport, and the Minister for the Environment, Mr Dempsey, will report on private transport.
In a scathing attack on the Government, the Labour Leader, Mr Ruairi Quinn, yesterday said "those who govern us" needed drive, imagination and innovation. Unfortunately these characteristics were not those of the present Government.