What target should we set for getting the budget deficit down to 3% of GDP – 2014 or 2016? It won't matter. For, despite the extraordinary intervention of the ESRI last week, that ship has already sailed a long time ago.

When it comes to a schedule, we simply don't have an option. It's 2014 or bust.

There was much head scratching in political circles at the ESRI's call for the pain to be spread out to 2016 because of its "grave doubts over the wisdom" of the 2014 deadline which posed a risk of "overkill".

Sure we could pick a fight with the European Commission on whether it should be a six- rather than a four-year plan. Who knows, we could even win that argument (though it's highly unlikely). But if we did, where would we borrow the €20bn or so required to run the country next year?

Anybody who believes the financial markets would be willing to be flexible on the timeline for Ireland getting its fiscal crisis sorted hasn't been watching what's been happening to Irish bond yields over the last few months.

The yields don't lie. The extremely troubled financial markets are very reluctant to lend money to Ireland. They think, quite understandably, that we are accumulating far too much debt too quickly and they are not sure that it is bearable. As a result, they are charging a whack of a premium to lend the Irish state money – a premium that is close to being unaffordable and unsustainable. It was these yields that prompted the NTMA to pull out of the bond market for a couple of months.

And that's as things stand. The idea that we could turn around and say 'actually, we're going to stretch our plan out to six years, instead of four, meaning we will need to borrow an additional €15bn', and that they would still lend us money, is for the birds. It won't happen. The markets simply won't lend to us at any kind of affordable price if we give even the slightest indication that we as a country are not intent about getting our deficit under control.

As the old adage goes, 'he who pays the piper calls the tune', and right now the financial markets are calling our tune.

That is not to say there isn't any risk involved in taking up to €15bn out of the economy over the next four years. Of course there is. Potentially there is a massive downside. The action is going to depress economic growth. Research recently carried out by the IMF has undermined the belief that addressing budget deficits in a clear and strong way helps create public confidence which can inspire consumer spending and hence growth.

The IMF looked at 170 examples of fiscal adjustment in OECD countries and found only two where economies expanded as deficits were cut. Interestingly, one of those was Ireland back in 1987.

Those of us who were around then do recall a palpable improvement in public confidence when, after a decade of inaction, Haughey's new government finally started taking action to restore order to the public finances. However, other factors – a booming British economy, a devaluation of the currency and falling interest rates – may well have been more significant in the country's strong return to growth.

In dealing with the current crisis, one shouldn't underestimate the boost it would give to consumer confidence if, after one or two budgets, people began to realise the worst pain was over. It would be naive, though, to believe that will counter-balance the massive hit €15bn in budget savings is going to make on people's disposable income.

But it would be even more naive to argue there is an alternative to making such savings. Even if we could afford it (and we certainly can't), a fiscal stimulus package wouldn't work in what is one of the most open economies in the world. And if we don't make the cuts, either the markets won't lend any more money to us or the borrowings will grow to unsustainable levels that will ultimately require even bigger cuts just to cover our interest bill.

Unfortunately, our only option right now is to plump for the lesser of two evils. Where there is scope for debate, though, is over how much of the €15bn should be front-loaded into year one. And here it's a balancing act between doing as much as possible to reassure the financial markets and not doing too much damage to economic growth. The option of making €7bn of savings in 2011 – which would bring the deficit down to 10% of GDP as envisaged in last year's budget – has been looked at by the Department of Finance as part of a range of different scenarios.

However, politically and economically it looks like too high a figure. Even if ministers could agree to that level of cuts, it would be political suicide for the government. It probably couldn't be done without ripping up the Croke Park deal. Economically, it would also be a massive hit for the struggling Irish economy. A four-year plan with €5bn in year one, €4bn in year two and €3bn for each of the final two years looks more plausible.

The hope is that the Irish economy will perform stronger than the current pessimistic projections. But that won't become clear until around 2012, and while it could impact on the 2013 or 2014 budgets, it won't minimise the pain for the next two.

The big worry, meanwhile, is that,even if all the pain is implemented, it still won't be enough to save the state from being bailed out by the EU or the IMF. Even if we get our house in order, Ireland – more so than any country in Europe – is hugely dependent on what happens to the global economy. If the world economy continues to struggle, then we're in serious trouble regardless of what action is taken.

Right now, the chances of avoiding outside intervention look no better than 50-50. And that's assuming we stick with the 2014 deadline. A 2016 deadline makes a bailout inevitable, regardless of how the global economy performs.

And that bailout will bring cutbacks even more severe than those currently envisaged. That is something that needs to be considered by those who believe that stretching out the state's austerity plan until 2016 represents some form of panacea.

After a decade of profligacy and waste in the public finances, we're left with Hobson's choice. You can argue about the detail. But, despite what the likes of the ESRI and ICTU say, there is no alternative to the four-year plan.

scoleman@tribune.ie