Minister for Finance Brian Cowen is likely to revise downwards the Government's forecast for economic growth this year in his Pre-Budget Outlook on Thursday, a new annual statement that replaces the traditional budget Estimates document.
Seen as a prelude to what is likely to be a tough Budget on December 5th, the document has been signed off by the Government against the backdrop of a marked weakening in the public finances.
While analysts in Irish and international organisations have pointed in their most recent reports to a slowdown in economic growth this year, the extent to which the Minister will reduce the 5¼ per cent growth rate he forecast at Budget time last year remains unclear.
Mr Cowen told the Dublin Economics Workshop conference in Kenmare at the weekend that it was "fair" to conclude that the near-term prospects were for lower but "perhaps more sustainable" growth rates.
With the latest Exchequer figures showing that the property slowdown is hitting government finances harder than expected, the Minister has already warned of lower growth in current expenditure. Gross current spending rose 11.5 per cent this year, a rise that helped bring gross public expenditure for the year to €56.3 billion.
The first part of the two-part outlook statement will set out Mr Cowen's revised economic forecasts for the current year and for 2007, 2008 and 2010. The second part will set out the level of expenditure required by Government and public bodies to maintain their current level of service.
With the Estimates statement now consigned to history as part of Mr Cowen's reform of the budget process, new spending measures will not be made public until the Budget statement.
This means the statement on Thursday is unlikely to include news of any new Government spending initiatives. While the outlook document will take account of the impact of inflation and pay increases under the Towards 2016 deal, it will not reflect new spending measures.
The Department of Finance declined to comment yesterday when asked about weekend reports that Mr Cowen will not introduce the 1 percentage point reduction in the higher income tax rate of 41 per cent that he mooted last year.
Accounting firm PricewaterhouseCoopers yesterday forecast that the Irish economy was poised to expand by 5 per cent in 2007 in advance of a slowdown to 4 per cent growth in 2008.
