I am strongly in favour of Irish participation in the single currency from the outset, the case for which has, I believe, been further strengthened by the change of government in Britain.

For, while there may have been disagreement between Blair and Brown as to when Britain should enter EMU, it is evident that under Labour there is a clear underlying commitment to join the single currency at some point in the next few years.

Towards that end the new British government has a strong interest in maintaining, as far as possible, a reasonably stable relationship between sterling and the euro in the intervening period.

As a result, the always improbable danger of a sudden, sharp, competitive devaluation of sterling, fear of which has lain behind the argument for remaining out of the euro until Britain joined, has thus become even more remote.

Irish participation in the euro must, however, be based on a recognition of the fact that, with the imminent advent of the single currency, one of the two weapons available to ensure non-inflationary economic growth, control of interest rates, is moving to the European level, as indeed must the interest rates themselves.

During the next 14 months our interest rates will, in fact, move close to the German level as our imminent adoption of the euro reduces the risk involved in operating a national currency in a small open economy. Particularly in the case of short-term interest rates, this will involve a sharp drop from their present level, and this remains true despite the current upward movement of continental interest rates.

Lower interest rates in fact represent one of the principal benefits to Ireland of participation in the single currency; they will help to consolidate our growth prospects in the decades ahead. However, with interest rates determined externally, from now on the achievement of balanced growth in Ireland, as in every other member-state, has to depend exclusively on national budgetary policy being operated in a counter-cyclical way.

What that means in simple language is running a tight budget when growth is strong, thus accumulating extra resources to release through "giveaway" budgets when growth eventually weakens.

Now the growth of our economy since 1993 has been phenomenal, averaging 7.5 per cent a year between 1993 and 1996, or about four times that of the rest of the European Union. This year the rate seems to have accelerated even further.

With a growth rate that may now exceed 8 per cent, with house prices rising astronomically and with the prospect of an imminent further boost to demand arising from a rapid and substantial drop in interest rates, one does not need to be a professional economist to know that what is needed now is a Budget that would restrain rather than boost the growth of our economy.

Unfortunately, the public sees the situation quite differently, viewing the massive flow of excess revenue into the Exchequer as grounds for a bonanza of tax reliefs in the coming Budget.

The Minister for Finance, Charlie McCreevy, has been doing his best to dispel this illusion. His remarks, however, are being treated generally as no more than the usual pre-Budget attempts to damp down expectations that might reduce the political impact of the goodies to come.

This is extremely worrying, not just in the immediate context of this Budget but because it suggests that neither politicians nor public may yet be adequately prepared for the new situation created by our decision to join EMU and participate in the euro.

The truth is that, because of our phenomenal growth rate, and because the interest-rate drop arising from EMU membership will be particularly large in our case we, more than any other memberstate, need to be ready to use budgetary policy to restrain growth at certain periods. Yet it seems that we are less prepared and willing to do this than are many of our partners. A major educational effort may be needed to bridge this dangerous gap.

It is also worrying that all our concentration seems to be, self-indulgently, on tax reductions, when there are in fact two more urgent priorities: investing in our infrastructure and re-educating and training our large core of long-term unemployed. These two needs are urgent because failure to tackle them could prematurely, and quite unnecessarily, curtail our burst of economic growth.

Our infrastructure is today that of the much poorer country that we were until quite recently. It is grossly inadequate for a country which today has a far larger, and more prosperous, working population. We are short of services for housing in the areas where jobs are being created, and our roads and transport facilities cannot accommodate the number of people and goods needing to be transported.

If we don't invest massively in expanding this infrastrucure, costs will rise, new industries will be choked off, and the emigrants whose return now crucially supplements our skilled labour resources will find they are better off staying where they are.

As the flow from the educational system starts to decline in the years ahead, our birth rate has been falling since 1980, and as the recent exceptional flow of women into the paid labour force starts to ease, our continued growth will increasingly depend on this emigrant inflow and on the return to work of the long-term unemployed.

But in order to activate the latter source of additional workers, it will be necessary to invest heavily in re-education as well as training, because the vast bulk of those who have been out of work for a long time are people who dropped out of the educational system early. In economic as well as social terms, failure to invest in this process would be absolutely indefensible.

Nevertheless, we have to face the fact that whatever else happens, the tax reductions provided for in the Partnership 2000 Agreement must be honoured. Of course, that agreement covers three years and, in our present circumstances, it would be better if this year's tranche of tax cuts were to be less than one-third of the total, leaving room for bigger reductions in taxes at a later point when the economy might benefit from a boost.

Perhaps sensing that, the Minister for Finance might be thinking in these terms and, clearly concerned about pressure emanating from their members, the trade unions have been making a counter-claim for an above-average tranche of tax cuts. Realistically, then, the Minister for Finance will thus probably have to concede £350-£400 million.

In order to leave room for such tax reductions, and so as to minimise their expansionary effects, Charlie McCreevy has clearly been trying to hold current spending increases to a level which, allowing for lower national debt interest payments, will not exceed 4 per cent, and may also find himself under pressure to limit the growth of public investment.

For the reasons given above, as a policy mix this is less than ideal, but it is probably the best that can be managed at present, pending a re-education of political and public opinion about the implications of EMU membership for the fiscal policy of member-states. One must hope that by skilfully juggling all these elements, the Minister will be able to avoid an overheating of the economy.