The Government will have €2.7 billion to spend on Budget Day, according to the State's leading economic think-tank.
In its Quarterly Economic Commentary published today, the Economic and Social Research Institute (ESRI) predicted that next year will see increased spending by consumers reaping the rewards of their SSIA saving schemes.
The economic experts also said a strong jobs market and healthy increases in wages will boost consumption.
The ESRI estimate around 11 per cent extra revenue, or €5 billion, will be available to Minister for Finance Brian Cowen in 2007, compared to 2006.
However economists suggested 8.5 per cent more expenditure will be needed to fund services, including welfare services, next year.
The ESRI said this amounts to €3.3 billion and is six million euro higher than the budgeted figure.
The ESRI's leading economists said consumption would grow strongly in 2007, at a rate of 7.4 per cent. They claimed this is due to a combination of maturing SSIAs, strong employment growth of 3.5 per cent and nominal wage growth of 5.5 per cent.
The think-tank said strong growth is likely to produce increases in VAT and excise revenues of more than 10 per cent in 2007, and it forecast a possible increase of over 6 per cent in income taxes due to strong growth in employment.
PA