Taoiseach Bertie Ahern has said the Government will have to reflect on the fact that revenues are not going to be as high as expected this year.
Speaking to reporters at Dublin Airport this morning, Mr Ahern said the reality was that there was a global slowdown, and where that went was a question of debate, but he said that Ireland's growth rate at 7% was far ahead of some of the biggest countries in the world.
He added: 'We are in pole position and it is a question of managing ourselves to remain there.'
The Taoiseach said of course we were affected by the economic downturn but this was nothing like the chills being experienced by other countries.
Yesterday, Bank of Ireland chief economist Dan McLaughlin said tax revenue could be up to £1bn less than projected at the time of the last budget on the basis of the latest Exchequer returns.
The situation has deteriorated in the August figures from the Department of Finance released yesterday evening, which showed that the Exchequer surplus for the first eight months of the year was £2,328m, down from £3,479m at the same stage last year.
Tax revenues rose from £13.9bn to £14.4bn but spending increased from £9.5bn to £11.8bn. The tax increase represents a rise of 3.7% compared with last year. Tax receipts rose by 5.6% in the first seven months of the year, and are now well below the 12.5% rise predicted at Budget time.
Earlier this year, the Department said it expected the surplus for the year as a whole to be £500m lower than predicted at Budget time.
Income tax receipts were up from £4.4bn to £4.7bn, while VAT and Corporation Tax were also ahead. Excise duties, however, fell to £2bn from £2.2bn a year earlier.
Meanwhile, IBEC director general Turlough O'Sullivan has said yesterday's Exchequer figures are not a cause for alarm, and more modest growth rates are 'not a problem'.
He warned, however, that the most worrying aspect was the level of current Government spending, which was increasing at a rate six times faster than revenue growth. Mr O'Sullivan said a continuation of this trend would plunge the economy back into a 1980s style crisis.
He said money should not be thrown at problems such as health when more far reaching reforms were necessary. Mr O'Sullivan said some further 'prudent' tax relief was possible in the next Budget and called for a significant reduction in employers' PRSI.
