Brian Cowen was yesterday busy establishing his credentials as a prudent Minister for Finance and a leader of Fianna Fáil.

However, if anyone accuses him of trying to buy the next election for the Government, he does not intend to let them away with it.

That was the clear message he gave when presenting his department's new economic projections yesterday. And anyone who thinks he is going to allow the Progressive Democrats to dictate the next budget is going to be delighted or disappointed, depending on their point of view.

That was the clear message he gave later that evening in a speech to the annual dinner of Dublin Chambers Ireland.

The projections are new in two senses of the word. New because they update the last projections - formed last December - for economic developments that have happened since.

A surge in tax revenue since then has turned an expected deficit of €950 million into a surplus €1.8 billion. The Government's stronger position means that surpluses - more modest ones - are also likely for 2007 and 2008.

From around 5½ per cent this year, the economy will grow by 5 per cent in both of those years.

The fly in the ointment is that a surge in oil prices and higher interest rates have pushed the Government's inflation forecast for this year up to 4 per cent year, over a percentage point higher than previously expected.

But Mr Cowen expects that both the European Central Bank and international oil markets will have done their worst to the economy soon, and that inflation will moderate in 2007 and 2008.

Given that optimism, the hope expressed by IBEC's Turlough O'Sullivan for the next budget to combat inflation may be disappointed.

On other areas, though, he may be pleased. The projections are also new in that they are part of a reformed approach to budgetary policy.

From early next year Government departments will have to produce output and performance targets for whatever funds they receive, a move consistent with IBEC's call for more efficiency from government.

But these are projections, not budgetary plans, and that budget measures will alter these numbers considerably. So what measures can be expected?

In his speech to the Dublin Chamber of Commerce, Mr Cowen gave this clear hint that Fianna Fáil may move closer to the Labour Party's view of taxation: "Inevitably, attention seems to settle on actual cuts in rates. But a widening of bands or an increase in credits is also a tax cut."

On the face of it, Mr Cowen's message yesterday was that the next budget will be a prudent budget, and it will be a clearly Fianna Fáil one too.

Reading between the lines, it might just also be signal that Fianna Fáil remains open for business with the Labour Party if, after the next election, the present coalition partners fall short of a majority in the Dáil.