EU forecasts predicting record growth in the economy have been rejected as too optimistic by the Minister for Finance, Mr McCreevy.
Private sector forecasters have also sharply criticised the predictions, saying they take no account of the slowdown in the international economy. Some analysts argue that good growth figures will strengthen the Commission's hand in arguing for a cut in Ireland's take from the next round of EU funding in forthcoming negotiations.
The Commission has predicted the economy will grow by an exceptionally rapid 11.4 per cent this year, up from an estimated 8.7 per cent growth prediction made earlier this year. Strong growth will continue, it says, with Gross Domestic Product (GDP) rising by 8.2 per cent next year and 9 per cent in 2000.
These optimistic GDP figures contrast markedly with the Commission's downward revision of overall EU growth next year from 3 per cent to 2.4 per cent.
Responding to the predictions, Mr McCreevy said that while he would like to believe the economy could grow by almost 18 per cent over the next two years, "simple common sense" dictated that the noticeable deterioration in the international economic environment would result in more moderate growth in the Irish economy in 1999 and 2000.
It also ignored the broad consensus among domestic and international commentators, he noted.
According to Mr Jim O'Leary, chief economist at Davy Stockbrokers, the Commission's forecasts are disingenuous and are aimed at depleting our share of the structural funds.
"If an economy has a large government surplus and the debt ratio is falling precipitously, it reinforces the case for withdrawing EU support."
It is unusual for the Commission's forecasts to be so at odds with the national authorities, Government sources note. It is understood the Department of Finance argued strenuously against such strong growth rate projections when it was presented with them in draft form.
The Commission has also revised significantly upwards its forecasts for Ireland's budgetary position.
It expects a surplus of Government revenues over spending of 2.1 per cent of national output this year, rising to 3.4 per cent in 1999 and a massive 4.6 per cent surplus in the year 2000, pointing to billions being available to pay off the national debt.
This prognosis will increase pressure for major tax cuts in the Budget and for pay concessions for nurses.
The latest Department of Finance predictions are for GDP growth of 8.7 per cent this year, while it expects the inflation rate will average about 2.75 per cent, before falling back in 1999.
The Commission expects a much higher growth rate and a rise in the inflation rate to 3.3 per cent next year.