There were two sets of interesting economic data released in Ireland yesterday. One furnished good news but was largely historical in nature. The other contained less welcome news and was pretty well up to the minute in terms of currency. I'll return to the upbeat news later. First, the downbeat news, which was set out in the Exchequer returns for the first half of the year.

The Exchequer returns provide evidence on two areas of interest: they tell us something about economic activity, and something about the state of the public finances.

Yesterday's figures were especially eloquent in relation to the former. They showed that tax receipts in the January-June period were just 5.4 per cent above their level of a year earlier. This compares with the projected 12.5 per cent increase set out in the budget for the full year. Expenditure taxes have been especially lacking in buoyancy. Excise duties were 3 per cent below their year earlier level. VAT receipts were 8 per cent above, which seems like a very satisfactory performance until it is set against the budget projection of an 18 per cent increase. These numbers point to unanticipated softness in consumer spending.

The sources of that softness are not hard to identify. The unwinding of last year's Y2K effect has pushed sales of new cars down by almost 30 per cent year-on-year. The restrictions on movement and activity imposed in a bid to keep foot-and-mouth disease at bay, have also taken their toll, especially through reduced sales of alcohol and petrol. Another by-product of foot-and-mouth has been a reduction in cross-Border trade (some of it illegal) in excisable items. In addition to all of this, consumers have become more cautious in response to the deterioration in the international economic climate and the perception that jobs at home are at greater risk than before.

Income tax buoyancy has abated quite a bit too. In the January-June period income tax receipts were less than 9 per cent higher than a year earlier, compared with growth of more than 12 per cent in the second half of last year. Granted, the big tax cuts in the last budget have started to kick in but, on the other hand, wage inflation has been accelerating. So, my judgment is that the income tax numbers are telling us something about jobs, namely that employment growth has continued to slow down through the first half of the year.

What do the Exchequer returns tell us about the state of the public finances? Well, the first message is that this year's surplus will be well below target. At budget time the Department of Finance projected a surplus (excluding privatisation receipts) of £2.5 billion (#3.17 billion) for 2001. They now reckon that it will be £500 million lower than this, on the basis of tax receipts undershooting by this amount. I reckon that the Department is too sanguine about tax receipts.

To hit its downward revised target would require that receipts in the July-December period be 15 per cent higher than in the corresponding period of 2000. That would represent a dramatic acceleration from the 5 per cent growth achieved over the past six months. I don't think it will happen. Accordingly, I can see tax revenue falling as much as £800 million below target.

This, of course, will have big knock-on effects into next year. At the time of the last budget, the Department of Finance was projecting an Exchequer surplus of about £1.8 billion for 2002.

This now needs to be adjusted downwards, not only in respect of the tax shortfall emerging for 2001, but also in respect of the extremely conservative current expenditure forecast upon which the projected surplus was based. The required adjustment could well be of a magnitude that will make it much more difficult than is commonly supposed for the Minister for Finance to design an election budget. It will certainly make it well nigh impossible for him to replicate his generosity of last December.

However, he can take consolation from the fact that the Central Statistic Office's (CSO) latest National Income and Expenditure accounts, also published yesterday, portray an even more flattering picture of his stewardship of the economy over the 1997-2000 period than had previously been painted. The CSO data show that GDP and GNP grew by cumulative rates of 34 per cent and 29 per cent respectively over this period. They show that, last year alone, GDP expanded by 11.5 per cent with GNP up by 10.4 per cent - the fastest annual growth rates achieved in the current upswing. We're not going to see a repeat of that performance this year.

Jim O'Leary is chief economist at Davy Stockbrokers