The Exchequer is still running a large surplus, the largest per head in the EU, but not at the record of the last few years.

It also appears that, for the first time since 1990, the Department may be in the position of having overestimated tax revenue for the year as a whole. It is still too early to estimate the full 12 months and the Department itself will not be making any changes for some months but if the figures are revised it will almost certainly be downwards. It was 1995 when the first three months of the year last saw less tax growth than the Department had been predicting. That year, revenue caught up and the year as a whole exceeded expectations if only slightly. Tax revenue for 2001 is already slower than expected, primarily because of foot-and-mouth, according to the Department. Officials admitted they were surprised when they first saw the excise duty figures for the first three months. Excise duties are actually down 8.3 per cent compared with the same three months in 2000. The Department had been targeting a 12 per cent increase over the year. Most of this reduction came in petrol duties but alcohol was up only slightly. Cigarettes came in as expected. VAT was also below expectations, rising by 12 per cent. It is unclear now quite why this was so, although the sharp slowdown in car sales following the surge in demand for 00 registrations in early 2000 is likely to be a contributor. If that were to continue, it would have serious repercussions on revenue raising generally.

The tax cuts announced in the last Budget have also yet to feed through to the figures. Although it gave away around £1.2 billion, the impact on the figures is not expected to be great, largely because of base effects.

So far income tax receipts are running 10.1 per cent ahead of last year compared with a Budget target of 8.4 per cent.

Corporation tax receipts are also ahead at 13.1 per cent compared with a target of 10.7 per cent. However, last year corporation tax came in below the Department's expectations and it is likely it was ultra cautious with this prediction this year.

On the spending side, the figures are so far running in line with admittedly high expectations. But the news can only get worse here. The Minister is unlikely to be able to afford a replica of last year's huge give-away Budget this year. The European Commission and the Central Bank will breathe a sigh of relief.