According to Mr McCreevy, there is "little doubt that there are considerable inflationary pressures in the economy". It will be an awareness of this which will hold back tax cuts that would otherwise be possible, as well as further public sector pay rises.

"I am signaling quite clearly that inflation will have to be borne in mind by the Government when it comes to the Budget. One thing the Government does have control over is budgetary matters and spending targets."

He adds that Ireland must be very careful if it is not to jeopardise its low-wage and low-inflation economy. "If inflation rises again it will lead to higher wage demands, unit costs will rise which will lessen our capacity to export which will lead to more job losses."

Charles Haughey told the Dunnes payments tribunal this week that accountants do not make good Ministers for Finance. "That could have been directed at me," says the new incumbent at Merrion Street, Charlie McCreevy, "although it could equally have been directed at Bertie Ahern, who was an accountant too". Mr McCreevy is relishing the challenge which the move from Opposition and running his own accountancy practice to running the national finances will bring. A man known for his tough line on spending, he has already put down a marker for his fellow Government ministers. At a cabinet meeting earlier this week, finance affairs and the forthcoming Budget were top of the agenda. And at least one minister was told that his spending ideas were just not on. Sitting on the comfortable couches in a corner of his ministerial office, sumptuously restored by its previous incumbent, Mr McCreevy appears at ease with his surroundings and indeed with the detail of his portfolio. Modern art adorns the walls, quite different, he notes, from the Kildare scenes he would normally favour.

Assuming the Government continues in office until at least 1999, Mr McCreevy will oversee one of the most important developments in modern Irish economic history. Mr McCreevy now sounds almost as convinced as his predecessor on monetary union, although he does admit that going in without the British will create problems. He insists that, on balance, it is the best option.

"We are damned if we do and damned if we do not," he says. "On the one hand it helps the single market and brings greater European integration. But the problem is that our biggest trading partner will not jump from day one, creating difficulties for the Irish economy."

He also points out that for years Ireland has been independent politically and economically and not tied to the British economy. "If we were to reverse now that would undo all of that and would remind the world at large we are a satellite of the UK."

Mr McCreevy also believes that monetary union will start on schedule in 1999, but that there will be many ups and downs on the way.

"What is happening in the currency markets now is no great surprise. It will happen to other currencies in the run-up to the single currency and is something that was predicted," he says.

The pound is currently losing ground against a very dominant sterling and is trading below 90p, but it is also very strong against other European currencies, threatening to break through the exchange rate mechanism ceiling of 15 per cent. Many analysts believe the Central Bank will have to start selling the currency or the Government will be forced into a revaluation of its central ERM rate which would hurt farmers and exporters.

It would also be taking a gamble on how long sterling is likely to remain strong. But Mr McCreevy does not appear rattled, while admitting that the issue is "hugely important" he says he is not particularly worried about the 15 per cent ceiling.

However, he insists that he cannot talk about the possible options. "Ministers for Finance should shut their mouths regarding currency, that is one of my die-hard principles. The market does not need any comments from politicians, they can take any position they like, but I'm not going to help them."

He is considerably less reticent about public spending and his rhetoric on this has not changed in over 20 years. As befits an accountant and a man who has been known to holiday with PD leader Mary Harney, Mr McCreevy is said to be already putting down firm markers for the upcoming round of estimates. The Government's first Budget in November is already becoming a focal point and the estimates round has begun, where all departments submit their budgets and spending plans for the year.

One of the key pillars of Mr McCreevy's economic plan is to keep net current spending at an average of 4 per cent over five years, in nominal terms.

He admits that the commitment on spending could mean the Government will spend, say, 6 per cent in one year if it rows back in another, but he is adamant that this will not happen.

Mr McCreevy points out that the Fianna Fail manifesto was a most specific document. Not only did it set a 4 per cent spending target but added that net current spending, including budget servicing, would amount to 4 per cent.

Meeting this commitment will be his biggest difficulty, he admits. "That is very, very difficult to get out of, there is no chance of getting out very easily." However, he admits that "you can get out of anything". But, he adds, "at least it can be judged as it is in black and white, most politicians wouldn't have put it there."

But the electorate can also banish any thoughts that this strong line on spending will lead to bigger than expected tax cuts. He insists there are unlikely to be any extra tax cuts, above what has been promised in the Fianna Fail manifesto or the Programme for Government. His main aim will be to keep economic growth on track. According to the Minister, we have accidently found a successful formula for running the country. That involves controlling public expenditure, prudent economic and public management, keeping our costs down and having low inflation.

Extra tax cuts cannot be given away lightly because of the fear of fuelling inflation. This is one item which does seem to be of concern to the Minister. He says bluntly that he is "very worried about inflation". While there is a view that inflation is at a low all over the world, that is not a view a prudent Minister for Finance can take, he says.

According to Mr McCreevy, there is "little doubt that there are considerable inflationary pressures in the economy". It will be an awareness of this which will hold back tax cuts that would otherwise be possible, as well as further public sector pay rises.

"I am signalling quite clearly that inflation will have to be borne in mind by the Government when it comes to the Budget. One thing the Government does have control over is budgetary matters and spending targets."

He adds that Ireland must be very careful if it is not to jeopardise its low-wage and low-inflation economy. "If inflation rises again it will lead to higher wage demands, unit costs will rise which will lessen our capacity to export which will lead to more job losses."

The possibility of inflation rearing its head through increased public sector pay deals is something else which cannot be allowed to happen, according to the Minister. He is very vocal in his insistence that Partnership 2000 must be adhered to. "An agreement is an agreement. We will honour our commitment to Partnership 2000, but on the other hand the unions must honour their commitment also. They cannot say five months after entering the agreement that it is not generous enough.

"But the trade unions have contributed enormously to our economic success. If it wasn't for responsible trade union leadership in the 1980s, the Irish economy would be dead today. They recognise that low nominal wage increases have worked well and I'm quite certain they are still of that view."

He points out that public sector pay in 1997 will be as much as £5.2 billion, an "enormous proportion" of net current spending. "It is a major factor in public expenditure and in some departments up to 80 per cent of costs is salaries and pension." Thus, Mr McCreevy, believes it is essential to adhere to the terms of the national agreement.

To back up his position on nominal wage increases the Government has so far kicked the Buckley report on pay in the semi-state sector into touch. The independent report recommended pay rises for a variety of civil servants, TDs and directors of semi-state bodies.

"I have done nothing about it, I will do something in the future, but I'm not dealing with it now," he stresses.

He adds that it is prudent to take into account the impact such rises could have on pressure for further rises throughout the public service. "It will be dealt with sometime in the future but I'm not going to put a date on it."

The possible sale of the TSB, however, looks closer than it has done in many years. The Minister says that dealing with the issue is not an immediate priority, but he hopes to deal with it over the coming months.