The Government is on course for tax receipts about €2 billion greater than originally accounted for, according to Goodbody Economics.

In its latest report, Goodbody said the budget deficit should fall to 1.9% this year, a vast improvement on the budget day forecast of 2.7%.

It will then fall to below 1% next year.

Describing Ireland as being in a "sweet spot", the stockbrokers said that the investment-led expansion of the economy is now firmly entrenched. 

There are also signs that the consumer is now once again in a position to support the recovery due to rising employment, pay rises and lower taxes. 

Goodbody predict that the country's GDP will grow by 4.3% this year and 4% next year - slight upgrades on their previous forecasts of 4.2% and 3.8%.

The fall in the value of the euro against the dollar and sterling will also support continued expansion in exports and foreign direct investment into the country.

Goodbody economists Dermot O'Leary and Juliet Tennent said the Government should spend the surplus through capital investment projects, tax cuts and tax breaks to support business and boost housebuilding.

Meanwhile, Davy is forecasting that - after 12% growth in 2014 - Irish house prices will rise by just under 9.5% this year, by just over 5% next year and by 4.5% in 2017.

Davy economist Conall MacCoille said he expects the Central Bank's mortgage lending rules will anchor house price inflation to earnings so that the house prices will remain at close to five times income.

Davy economist Conall MacCoille said he expects the Central Bank's mortgage lending rules will anchor house price inflation to earnings so that the house prices will remain at close to five times income.