Cowen described 2007 as a "turning point" for the Irish economy. He told lawmakers that while the economy has performed reasonably well in the first half of this year, the current indications are that the short- to medium-term outlook has changed compared to that envisaged on Budget day.

GDP growth in the order of 4.75% can be expected for this year, he suggested. Looking forward, GDP growth is expected to be 3.25% next year and to average 3.5% for the period 2008 - 2010.

Cowen also confirmed that an Exchequer deficit of up to EUR1 billion is now forecast, as opposed to the deficit of EUR546 million forecast at Budget time, and reflecting the weakness in some taxes mainly as a result of the weaker property market. However, a General Government surplus of 0.9% of GDP is expected for this year – the 10th in 11 years.

Commenting on the economic and budgetary forecasts, the Finance Minister observed that:

“The lower growth going forward will have implications for us all. But we mustn’t lose sight of the fact that this performance is nevertheless impressive by international standards and one that many of our European partners would love to replicate.”

Thursday's Pre-Budget Outlook was the second announced by Cowen, and comes at a time when the government is bringing about significant reforms to the budgetary process, central to which is a unified budget. This will mean that all key announcements on both the spending and the revenue will be made on the same day. According to Cowen, the Pre-Budget Outlook is also part of these reforms, and is designed to "enable greater transparency and understanding of public sector funding”.

The Pre-Budget Estimates included in the Outlook set out the estimated cost of continuing the current level of services for 2008. Overall, the figures show that the total gross current spending next year on existing services will be almost EUR51 billion. This is an increase of EUR2.3 billion, or 4.8% over 2007.

“Fifty One billion Euro is a great deal of money and it is important that both the Government and the Houses of the Oireachtas look at what we are getting for this money, whether we are spending it on the right priorities and the value we are achieving for this money," Cowen noted. "Not every problem can be cured by spending more money. Priorities change and we must change our responses accordingly."

He concluded that: “Our success to date has been built upon the foundations of sound public finances, and competitive economic policies that promote enterprise, investment and job creation. I believe that these policies – strengthened, reinvigorated and renewed – will stand our country in good stead into the future. Today’s launch of the new expanded PBO is part of our ongoing reform process.”