Government cuts provoke Nice Treaty crisis in Ireland

Claims that a minister deliberately misled voters before May's general election have plunged Ireland into a political crisis which is threatening hopes of a "yes" vote in next month's crucial referendum on the Nice Treaty.

Despite being accused of concealing the truth about the country's public finances – and being booed on live TV – the Irish finance minister Charlie McCreevy, was yesterday refusing to resign in a growing scandal over his pre-election pledges. Pro-Europeans fear the row will hinder the government's efforts to mobilise its supporters for next month's referendum on 19 October, and could provoke a big anti-government protest vote.

Ireland rejected the Nice Treaty in a referendum last year. A second Irish "no" would leave the EU in turmoil and could derail Irish enlargement because the treaty outlines minimum changes needed to admit up to 10 new member states in 2004. Opposition politicians who back the Nice Treaty are calling on voters to reserve their anger at the government's behaviour for the local elections.

The political furore followed the publication in The Sunday Tribune of a Cabinet memo revealing that spending cuts of more than €900m (£570m) are planned next year on top of measures already introduced.

The paper says the leaked document also shows ministers were well aware of the true situation before the election when Mr McCreevy denied cuts were planned and his Cabinet colleagues carried on spending

Faced with opposition demands for his resignation, a finance department spokesman said the minister had no intention of stepping down. "McCreevy will not be resigning," he said. "There's no question of it."

The ministry said an investigation has been launch-ed into how the document came to be in the newspaper.

Another minister, Seamus Brennan, last night insisted the government was "blue in the face" from saying there were no cutbacks, but a €3.6bn increase in public spending this year. And he maintained that €900m in cutbacks referred to in a leaked Cabinet memo were "cutbacks on expansion plans" and not cutbacks per se, despite the memo reference to the implications for the "existing level of service".

Since returning to power, the centre-right government has already made a series of what it calls "adjustments" to spending, causing widespread public anger.

With tax revenues dwindling due to an economic slowdown, the memo proposes swingeing cuts to environment, education and social welfare spending. Health, already chopped this year, would be further hit, and hefty hikes in excise duties on cigarettes, petrol and beer are also proposed.

But in a pre-election pledge Mr McCreevy told voters: "I can confirm there are no significant overruns projected and no cutbacks whatsoever are being planned, secretly or otherwise."

Brendan Howlin, deputy leader of the Labour Party, said Mr McCreevy had lost all credibility, adding: "At a time of more difficult economic circumstances, a finance minister without credibility or authority is a luxury the country cannot afford. McCreevy should accept responsibility for this shocking con job and go."

The main opposition party Fine Gael accused the government of "deception on a massive scale" and also urged Mr McCreevy to quit.

Growth of the Irish economy has been slashed to less than 5 per cent ,from average annual rates of 10 percent.