The Government spending Estimates, setting out how much will be directed at key areas next year, underline the changing economic reality which - the figures suggest - the Department of Finance does not expect to improve rapidly in the coming 12 months.
Spending has been cut across many areas, although health and education, which are regarded as key battlegrounds for the next election, are being targeted for additional funding.
Other Departments, as Mr McCreevy has stressed in recent weeks, have had to take a hit to pay for this largesse to what the Government regards as key political priorities. However, capital spending on infrastructure, which many regard as vital for any economic recovery, has also been slashed. The minister has hinted that he will announce new capital spending in the Budget in three weeks' time, but the extent of this will depend on the scale of tax cuts and social welfare spending as well as the health of the Exchequer finances at the end of November.
The figures underlying the Estimates are interesting and point, perhaps not surprisingly, to a set of pessimistic assumptions from the Department for next year. The minister will not officially outline the forecast until Budget day. However, it appears that the Department is assuming growth in Gross National Product next year of between 1.25 per cent and 2.1 per cent, depending on how quickly the economy grew this year, with an assumption that GNP will be around €102.89 billion (£81.03 billion) in 2002.
It is also expecting a rise in unemployment, to an average of 155,000 people, from 142,000 this year. At the same time, money for F┴S training schemes for the employed has been cut by 51 per cent while training for the unemployed has been increased by 38 per cent. IDA grants have also been cut back by almost 30 per cent, presumably on the assumption that there will be no pick-up in foreign direct investment next year.
But perhaps the biggest turnaround is the contrast between current and capital spending, with the former accounting for the largest increases. Exchequer-financed capital spending is only up 5 per cent from last year, although monies allocated under the whole public capital programme are up 13 per cent. The difference is mostly accounted for by spending by semi-States such as Bord Gais which is going ahead with its pipeline building, CI╔, as well as some EU funding. Either way, the 5 per cent figure represents a substantial deceleration. The minister insists that all projects due under the National Development Plan will go ahead, but as the employers' organisation, IBEC, warns, it is unlikely to be enough to solve the State's growing problem of congestion and delays. Mr McCreevy also hinted that further funds may be delivered in the Budget for specific projects.
In the meantime, spending on areas such as roads, housing and environmental services are up around 8 per cent, while capital spending on health is up €443 million, or 29 per cent.
In contrast, spending on the day-to-day running of the Government is expected to grow by 9 per cent. This is substantially lower than the 20 per cent-plus prevailing this year, but is nonetheless substantially ahead of any projections for revenue increases for 2002, which many commentators are pencilling-in at 3 per cent. It is also ahead of the 6 per cent increase which organisations such as IBEC called for and means the minister will have little left for tax cuts or social welfare spending increases on Budget day, if he is to keep borrowing to a minimum.
It is also worth noting that this is a pre-Budget figure and the minister has stressed that some Departments are still pressing for more. It now appears the minister will be unable to avoid targeting a deficit on Budget day - the only question now is how much.