It doesn't look like an economy balanced on a knife edge does it?

Last week US tech company LinkedIn announced it is hiring another 800 people at its European base in Dublin, taking the headcount there to 2,000 by next summer.

Yesterday Government funded research centre AMBER announced 350 positions for high-end researchers.

It's part of a jobs trend that has seen unemployment fall below 4.5% in the latest monthly estimate, with 2.3 million people in work - spending in the economy, and swelling the Government's tax take.

With inward migration now a key driver of employment growth, there is even more pressure on the creaking infrastructure of the State. The need to build a lot more housing is well known, and well commented on.

The Government has already announced a long-term capital investment programme to address bottlenecks and give the economy the kind of capacity it needs to keep expanding, and meet social needs.

Big spending increases have been programmed this year and next - and for years to come.

But there is a problem - with an economy operating at or very close to full capacity, spending more on infrastructure, however badly needed, runs a risk of overheating.

Add to that the need to build more homes, and the overheating risk rises. There are already not enough building workers in the State to do all the work that’s needed - pushing up construction wages, and ultimately building prices.

The fiscal watchdogs are barking, and saying it's time, not for tax cuts, but for tax rises.

And yet there is a gigantic risk to this scenario - and it’s called Brexit. All the expected growth for next year could come to a shuddering stop if the British leave the EU at the end of October without ratifying the deal that was agreed with them last year. 

Faced with such a shock to the economy, the prudent thing to do is nothing - no tax cuts, no spending rises, no tax rises either.  

It might mean having to pump money into the economy to help cushion the blow from a no-deal Brexit.  And that might mean running a deficit again - borrowing money to pay for stimulus spending, and extra welfare payments - the so-called automatic stabilisers.

The prospects of a no-deal Brexit increased as the British Conservatives whittled their choice of candidates to be the next Prime Minster down to two, both of them convinced they can scrap the backstop and negotiate a new deal with the EU.

But the EU summit made clear - yet again - that the backstop and the Withdrawal Agreement are not up for renegotiation.

That’s why the chief economist at the Department of Finance has talked about an economy balanced on a knife edge: On one side is the risk of an overheating, uncompetitive economy heading for a crash unless constrained. On the other, a Brexit-battered economy heading for a crash and needing the fiscal equivalent of battlefield first aid.

So, if you are the Minister for Finance, which problem do you chose to confront in October's Budget? The clues will come in today’s Summer Economic Statement

Budget Day is 8 October - a week after the Conservative Party conference, a week before the next EU summit - the new British Prime Minister’s first - and just three weeks before the Article 50 deadline runs out. 

So the summer statement is likely to focus on the kind of immediate hit the economy would get from a no-deal Brexit in October.

Trying to pick which Brexit scenario the economy is most likely to face next year is a really daunting task, making this year’s Budget-making process even more difficult than usual.

If the politicians get it right - in either scenario - they won’t be thanked by an electorate facing either higher taxes or the economic fallout from a no-deal Brexit.

But if they get it wrong - in either scenario - things could get pretty bad, politically as well as economically.

The worst scenario is to be locked into a contractionary Budget, taking money out of the economy through higher taxes, whilst battling the recessionary effects of a no-deal Brexit. No government likes to bring in a corrective budget in April.

All of which is likely to point to a cautious, low-key kind of Budget on 8 October - one in which the Government keeps its powder dry, ready to respond to events as they unfold next year.

Prepare for the worst, and hope for something better.

Ireland runs risk of austerity-era spending cuts - economist