Exchequer data indicate a sizeable decline in tax revenue in the first half of 2008, primarily reflecting a marked slowdown in property related taxes, but also indicative of a slowdown in consumer spending. On the expenditure side, the weakening of the labour market is increasing social expenditure. This points to significant deterioration in the fiscal deficit for 2008 relative to earlier projections.
I note that the Department of Finance has revised its estimate for the full year General Government Balance to a deficit of about 2¾ per cent of GDP. Our own internal estimates are broadly in line with this assessment. The slowing of growth coupled with the risks facing the economy presents significant issues for fiscal policy.