The Central Bank has cut its forecast for economic growth from for next year from 4% to 3.25% its quarterly bulletin.

It says it is reducing its forecast as a result of weaker consumption and a slowdown in the housing sector in the Irish economy.

The bank says house building and property prices are moving towards more sustainable levels.

And it says the economy is still performing well, despite less house building and international financial turmoil.

But the Central Bank wants to see the Government to keep its public finances in order in 2008.

It says would be desirable to aim for a surplus in the General Government Balance.

It adds that would ensure that in the event of lower economic growth the public finances could accommodate this without the Government having to resort to 'corrective action'.

That action would inevitably take the form of higher taxes, or spending cut-backs.

The bank believes that spending on the National Development Plan is moving ahead quickly.

Unlike the construction industry, it believes there is no need for the plan to be accelerated any further.