Brian Cowen (Laois-Offaly, Fianna Fail)

The Exchequer account recorded a deficit of €3.1 billion in the first nine months of the year compared to a deficit of €136 million in the same period last year.

While the Exchequer balance at the end of September had worsened in comparison to the same period in 2006, this was not unexpected. The budget day forecast was for an Exchequer deficit of €546 million in 2007 compared to a surplus of almost €2.3 billion last year. The extent of the deficit so far this year is somewhat more than anticipated and is due largely to tax revenues being €490 million below profile and expenditure being €274 million above profile at this stage.

As indicated at the end of September's Exchequer returns, there is likely to be a shortfall in overall tax revenues this year of up to €1 billion reflecting developments in taxes such as those relating to the property market. While this will be offset to some extent by positive developments on other elements of the Exchequer account, an Exchequer deficit of up to €1 billion rather than the budgeted deficit of €546 million now seems likely.

While taxes are likely to be below profile this year, it must be remembered that we still expect to collect more than €48 billion in overall tax revenue this year, which is an increase of approximately 5.5% on last year's very strong performance. This significant level of tax revenue enables the Government to continue to provide for improved day-to-day public services, as well as contributing towards the cost of the roll-out of the national development plan.

It should be noted that the public finances remain in good health generally. On the European measure, a general Government surplus is likely to be recorded again this year, the tenth year in the past 11 that this has been the case. This is an impressive performance by any standards. The debt-to-GDP ratio is likely to remain at the second lowest in the euro area, in line with the Government's long-term priorities.

Later this week, I will publish my pre-budget outlook which will set out in more detail the emerging revenue and fiscal position that we face. This will be an important step in the delivery of a unified budget.

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