AFP - Ireland will unveil an emergency recession budget Tuesday, including tax increases and spending cuts, as the government struggles to contain a surging public sector deficit.

The first eurozone country to go into recession, Ireland's jobless toll has soared to 11 percent, consumer spending has collapsed by 20 percent and its property bubble has burst, with prices dropping over 40 percent so far.

Prime Minister Brian Cowen has warned the budget will only be a first step on a painful austerity path to tackling the country's economic problems and bringing the deficit below the eurozone target of three percent of GDP by 2013.

"There is no silver bullet... that solves the problem overnight," added Cowen, who is to cut the number of costly junior ministers in his government from 20 to 15.

Finance Minister Brian Lenihan needs to shore up international and domestic consumer confidence in the former so-called "Celtic Tiger" economy as it faces the worst downturn on record.

Pre-budget finance ministry estimates forecast the economy will shrink by 6.75 percent this year as exchequer figures for the first quarter revealed the worsening meltdown in the public finances.

Tax revenues plunged 23 percent and expenditure was six percent ahead of schedule.

The exchequer deficit for the first quarter was 3,721 million euros (5,003 million dollars), over ten times the deficit of 354 million euros in the same period last year.

Rossa White, chief economist with Davy stockbrokers, expects Lenihan will target a net saving of 3.5 billion euros for this year and will outline a multi-year road-map of how the public finances can be brought back into line.

"They would need to go for more than that on a gross basis, so they would be looking for tax increases and expenditure cuts of at least a billion euro in excess of the 3.5 billion euros," he said.

Export-dependent Ireland has become uncompetitive and needs to reduce its cost base if it is to benefit from an international upturn, he added, so the balance of savings should lean towards expenditure cuts rather than tax.

"Ideally the savings should be two-third cuts and one-third taxes but I fear they will do it the other way round," White said.

Davy estimates that without a correction, the deficit is heading for about 13 percent of GDP this year and White does not think the government will be able to achieve a target of 9.5 percent mooted in January.

"If they do go for 3.5 billion euros in savings and achieve that it will reduce the deficit by about two percent so you would end up with 11 percent of GDP."

He expects a tax levy introduced for the first time in the emergency budget last October will be at least doubled -- to two percent on earnings up to 100,100 euros and four percent on the balance of all income above that level -- as it is the quickest way to get in tax.

Analysts are also expecting the budget will reveal some details of a bad bank or asset management company that would purchase "toxic" property debts from Irish banks in an effort to clean up their balance sheets.

Ireland is investing seven billion euros to recapitalise the country's two biggest lenders, Allied Irish and Bank of Ireland.

On Monday, it emerged that the Irish premier is to slash the number of junior ministers from 20 to 15. Each draws an annual salary of over 150,000 euros, not to mention costly official staff.

The number of juniors has risen from just seven in 1978 to 20 today.