FURTHER spending cuts and Budget tax rises are on the cards after a record slump in the public finances.

Yesterday, Government forecasts for the State coffers were thrown into disarray — just a month after they were made — following a huge €780m shortfall in VAT receipts in July.

Total tax revenues are now more than €2bn behind target for the year so far, according to the latest Exchequer returns.

Last night economists said Finance Minister Brian Lenihan would have to borrow more than €9bn this year.

And next year will be much worse, with corrective action needed to prevent borrowing surging through EU limits.

December’s Budget will have to get borrowing down, and that will mean bigger spending cuts than the €1bn already announced.

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