The Government is going to find it very difficult to stand up to the nurses - and to demands for a generous Budget - in the light of the most recent Exchequer figures.

Tax receipts are £1 billion (€1.3 billion) ahead of target, which provides trade union leaders with considerable extra ammunition in saying the tax take should be cut. They are also bound to fuel demands for extra public sector pay increases as part of any new national agreement.

Income tax receipts are running way ahead of estimate, while stamp duty on booming house sales and the equity market is also considerably above expectations.

The huge inflow from corporation tax receipts is, according to second secretary at the Department, Mr Michael Tutty, due to recent high levels of foreign direct investment.

Overall, total receipts in the first nine months of the year came to £14.03 billion, with a tax inflow of £13.67 billion already almost 79 per cent of the full-year target and well ahead of expectations. Tax revenue in the first nine months was 15.4 per cent ahead of the same period last year compared with a Budget estimate of 7.5 per cent.

But the rate of increase has slowed from 17.5 per cent in June, as the Budget tax cuts start to affect the figures.

Surprisingly, so far this year spending is running slightly behind target at a year-on-year increase of 8.8 per cent, compared with a Budget target of 10 per cent. But officials point to pressure in areas including health, education, agriculture and justice. These are offset by savings on social welfare and in other areas. As a result, spending is expected to be about £100 million above Budget day target.

The Department has already pencilled in £100 million for the settlement of the nurses' dispute, the amount recommended by the Labour Court.

Capital spending is also set to exceed targets by about £164 million. This is mostly due to the purchase of Farmleigh House, about £70 million on roads and a saving of about £12 million on the regeneration of Ballymun as the project runs behind its timetable. But whatever about the detail, the sheer level of surplus gives ample room for the Government to fund a wide variety of projects in the forthcoming national development plan, as well as scope for large-scale tax reductions and social welfare rises in December's Budget.