Pádraic McCormack (Galway West, Fine Gael)
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Question 27: To ask the Minister for Finance his latest forecasts for the tax receipts in 2009 in view of the shortfall in tax receipts in October and November 2008 and the downward revision in forecasting for the economy; the way he plans to allocate the shortfall between higher taxes, higher borrowing or lower spending. [45194/08]

Willie Penrose (Longford-Westmeath, Labour)
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Question 54: To ask the Minister for Finance if, in view of the November 2008 Exchequer returns, there is a need to revise his forecast general Government deficit of 6.5% of GDP, or just over €12 billion for 2009; if there will a need for a mini-budget or other measures in the first half of 2009; and if he will make a statement on the matter. [45347/08]

Kieran O'Donnell (Limerick East, Fine Gael)
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Question 69: To ask the Minister for Finance when he proposes to introduce a supplementary budget for 2009 in view of the decline in Exchequer tax receipts to date in 2008; and if he will make a statement on the matter. [45381/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 27, 54 and 69 together.

In the period since the Budget was presented to this House, the economic environment has become considerably more difficult. Many of our trading partners have entered recession and projections for demand in our key export markets have been revised downwards significantly. To put this into perspective, the IMF now expects economic activity in the world's advanced economies to contract next year, the first contraction for this group of countries in the post-war period. On the domestic front, the economic and fiscal data which have become available since the Budget have been poor, confirming that the outlook for next year has deteriorated further.

The November Exchequer Returns show that overall government spending for 2008 is close to what was planned. However, the latest 2008 tax returns reflect the severity of the current economic slowdown which has accelerated considerably both at home and internationally in recent times. The gap between spending levels and tax receipts in 2008 has widened and as a result I now expect that the Exchequer will have to borrow about €13 billion in 2008.

In the Budget my Department projected that the economy would contract by 1 per cent in 2009. Forecasts produced by the ESRI and by the Central Bank set out a similar economic assessment. Reflecting the unprecedented recent economic developments since then, by end-November the consensus of market forecasters was for economic activity to decline in 2009 by around 3 per cent.

At Budget time, I identified that there were significant risks to the economic and fiscal forecasts for 2008 and for 2009. The further deterioration in tax receipts in 2008, as seen by the end-November Exchequer Returns, the continuing weakening of consumer and investor confidence, adverse currency movements, continued difficulty in the international financial markets and depressed economic conditions, are all evidence of those risks materialising. All indications are that economic activity in 2009 will contract by significantly more than the forecast in the recent Budget with an overall contraction of perhaps somewhere in the region of 3 to 4 per cent. The disimprovement in the 2008 revenue take alone would push the 2009 General Government Deficit up by about €1.5 billion to 71⁄4 per cent of GDP. In addition, each 1 per cent disimprovement in economic activity in 2009 beyond the contraction of growth of 1 per cent already forecast would increase the General Government Deficit by about 1⁄2 per cent.

Upon receipt of the end-year fiscal data and the latest economic data, including the third quarter national income data, a revised economic and fiscal assessment will be prepared by my Department in early January and brought forward for Government consideration. This assessment will reflect the dramatically changed environment now being faced. We are living in a time of unprecedented economic difficulties, and the changed circumstances that have occurred in a short period of time must be addressed.

In terms of Government action, I would remind the Deputy that last summer in response to the weakness in tax receipts, we took steps in relation to the growth in public expenditure. Then in the autumn we decided to bring forward the Budget so as to address the fiscal situation. In the Budget we took various measures needed to safeguard the public finances as well as underpinning economic activity. For instance we are continuing to invest about 5% of GNP in capital projects that will enhance the productive capacity of the economy. Also the Finance Bill has a number of pro-enterprise measures including various improvements to the Research & Development tax scheme.

Now, in the light of the further deterioration in the economic and budgetary situation, the Government is continuing to identify measures to ensure the sustainability of the public finances, while also focusing on areas that can expand the productive capacity of the economy. This will enable the economy to be suitably positioned to exploit the global recovery when it emerges either late in 2009 or, as is now more likely, well into 2010.