Next year's Budget, which will be delivered on December 3rd, may bear a strong resemblance to its immediate predecessor.

Last year Mr McCreevy set out to hold down spending growth and make limited tax changes. This year he will aim to consolidate low levels of spending growth and will - again - have no room for largesse on taxation. It could have been worse. A few months ago a serious tax shortfall - and a borrowing over-run - appeared in prospect. This would have affected Exchequer forecasts for 2004 and made for a very difficult Budget.

The latest Exchequer returns, published yesterday, provide further evidence of a gradual improvement in the Exchequer finances. Income tax, in particular, is improving and receipts here are now running 1.4 per cent ahead of 2003, not too far off the Budget target of 2.6 per cent.

The November self-assessment returns will now be crucial. Before these are collected the Department of Finance is maintaining its position that a shortfall of up to €500 million in tax revenue for the year is possible. But with a shortfall of less than €200 million in the first 10 months, this now seems unlikely.

Corporation tax is showing some signs of recovery. Again, sizeable receipts are expected here this month. VAT was weak in October - the main negative in the latest figures - and is now just 8.6 per cent up on the year, compared to a Budget target of 10.6 per cent growth. Excises remain very weak, hit by the decline in spirits and tobacco sales, while stamp duties are buoyant due to the housing market.

Overall tax revenue growth is now 4.9 per cent ahead of the same period last year, below the Budget forecast of 8 per cent for the year but better than looked likely a few months ago. In a comment on the figures, Davy stockbrokers said that the tax revenue target for the year was "increasingly likely" to be met.

On the spending side, current expenditure is running 9.3 per cent ahead of last year, just above the full-year forecast. However capital spending is running 12 per cent down in the first 10 months, well below target. Close attention will be paid to how this area is handled in the estimates, due to be published next week, which will outline 2004 spending plans.

The estimates are likely to be tight and the Budget itself may well be a "steady as she goes" affair , though depending on his borrowing target, Mr McCreevy may still have to look for new revenue in some areas.

Arthur Beesley, political reporter adds: the Opposition said the figures showed Government management of the economy was undermining competitiveness.

Labour's finance spokeswoman, Ms Joan Burton, accused Ministers of cynical political motives in the decision to cut capital spending. "These unnecessary cuts are intended to fill the Fianna Fáil war chest for the next election, at the cost of future jobs and undue suffering,"she said.

Fine Gael's finance spokesman, Mr Richard Bruton, said reduced capital spending and high inflation would lead to further slippage in competitiveness.