The Republic will need to run a budgetary surplus next year so the economy can withstand an expected slowdown in the US, Minister for Finance Brian Cowen has warned.

Mr Cowen downplayed expectations of a giveaway budget yesterday, saying he wanted a surplus to enable the economy to withstand future challenges.

At a meeting of EU finance ministers in Brussels he warned that the economy would feel the effects of a slowdown in the US economy faster than many other European member states.

"About 30 per cent of our manufacturing employment jobs are from US companies and just under 20 per cent of our merchandise exports are to the US. So that is an issue, it reinforces the need for us to proceed prudently," said Mr Cowen.

EU finance ministers were briefed at the meeting by EU monetary affairs commissioner Joaquin Almunia on the potential impact of the current slowdown in the US economy. He said he expected a "soft landing" of the US economy, with growth rates set to be about 2.3 per cent of gross domestic product this year.

However, Mr Cowen said there was some concern in relation to the housing market in the US, where housing starts fell by 18 per cent in the US over the past 12 months. "The point that we would make was obviously that a slowdown in the US economy would affect us greater and quicker than others," said Mr Cowen, referring to the high level of US investment in the Republic and significant trading relationship.

"We will adopt a fiscal position to ensure we have enough room to manoeuvre in the event of any adverse effects coming down the line, particularly internationally in the US. These are downside risks you must factor in," he added. However, he gave a more upbeat assessment of the Irish housing market, which he said has seen the level of price increases decline recently. He said that he hoped this cooling off continued as increased supply met demand in the market.

On the issue of abolishing stamp duty, Mr Cowen said that he stuck by his earlier statements on the matter.

Meanwhile, EU finance ministers failed to agree a deal to increase the minimum level of duty on beer and spirits by 31 per cent. The proposed increase, which would not affect the Republic due to the existing taxation level on alcohol, came up against strong opposition from the Czech Republic.

The Czech government opposed any tax increase on beer and as unanimity is needed for any tax change at EU level, the proposal could not pass.

A compromise proposal is being prepared, which would only increase the tax on spirits, according to EU sources close to the discussions. EU ministers also failed to agree on a proposal to increase the duty-free allowance on goods brought by travellers into the EU from a non-member country.

Finnish finance minister Eero Heinaluoma, whose country holds the six-month rotating EU presidency, said the discussion was useful but no deal could be found.

"It seems that taxation questions at this time are hard problems," he added.