Taoiseach Leo Varadkar has told a meeting of his TDs and Senators that reports of the British Prime Minister being humiliated at Salzburg last week were exaggerated.
Theresa May was told by European Council President Donald Tusk that her blueprint Brexit plan would not work in its present form.
At an informal EU summit in Salzburg, Mr Tusk said that the EU would not accept any proposal which threatened the single market.
Mr Varadkar said that the British press had built up an expectation before the summit that Mrs could go over of the head of European Commission's chief negotiator, Michel Barnier, and appeal to EU leaders, which clearly could not happen.
He told his colleagues that the EU continues to back Irish interests in relation to Brexit.
Mr Varadkar also spoke about the upcoming Budget, and said that he did not want to repeat the mistakes of the past.
The Fine Gael meeting heard It will not be a giveaway Budget but would be a broadly balancing one.
Earlier, he said the Government is considering increasing the capitation grant for schools in the Budget.
The grant is paid to primary and secondary schools to cover running costs and is based on the number of pupils enrolled in the school.
Mr Varadkar was responding after Fianna Fáil leader Micheál Martin said the ongoing cost of going back to school is a genuine concern for parents.
Mr Martin said the average allocation to schools to cover the cost of light, heating and printing will not cover the average expenditure of around €91,000.
Previously, the Society of St Vincent de Paul said schools were being forced to seek voluntary contributions from parents to make up the difference.
In the Dáil Mr Martin said small and medium schools suffer even more, and DEIS schools are hit the hardest.
"I would put it to you, the most effective way to deal with this, is to accept that the existing capitation grant is wholly inadequate, particularly for DEIS schools, and priority must be made for an increased capitation grant in the forthcoming budget" he said.
In response Leo Varadkar said this was an issue that people have raised with him as well.
"Increasing capitation grants for next year is a budgetary matter, and I know it's a priority that Fianna Fáil has raised with me in the Budget," he said.
He said the current Government has hired 5,000 more teachers, built new schools and technological universities, and invested massively in education.
And he added "an increase in capitation is absolutely something that is under consideration for this budget."
Additional reporting Justin McCarthy
