The European Commission has issued a warning today about problems facing the Irish economy.
The report highlights the effect of the downturn in the housing market, the loss of competitiveness of Irish exports and growing concerns about future pension payments due to the ageing population.
For the past ten years, the reports issued by the European Commission on Ireland's economy have been glowing.
But this year Brussels is firing a warning shot over the public finances.
The essential message is that Ireland is on a transition to lower growth and that there has been a 'noticeable deterioration' in public finances.
From a sound surplus in 2006, the Government is expected to be in deficit in 2008 and Ireland runs the risk of that increasing in subsequent years.
This means that over the next few years the Government will have to keep a close eye on public debt and will have to cut Government spending.
The slowing domestic demand has been coupled with problems facing Irish exports.
These are believed to be due to the weakness of the dollar and sterling and the increasing costs at home of producing Irish goods.
The report is mandatory under the Growth and Stability Pact, which governs members of the euro zone.
