Inflation is the key burden on the Irish economy, and it is well documented. The Central Bank says that the situation could be made worse by the recent budget. Its bulletin stated: 'While there are several desirable individual features in the Budget, the overall thrust is likely to exacerbate the dangers already evident in the area of inflation, wages and house prices.'

Fine Gael's spokesman on finance went a step further than the Central Bank. After hearing its comments, Michael Noonan said that the Irish economy is more vulnerable now than it has been at any time in the last decade.

Mr Noonan said: 'The government's stance in the Budget clearly indicates a belief that the policies that have been so effective over the past decade will be equally as effective going forward. There is a failure to recognise that the environment has changed and different policies are now required.....the reality is that the tax cuts will just fuel demand and exacerbate the imbalance between demand and supply in the economy that is leading to congestion.'

He continued: 'The experts in the Central Bank now believe that the home-grown nature of much of our inflation is confirmed by the persistent and substantial increases in service inflation and the increase in property prices. Yet the government persists in pumping money into the economy without any thought for the consequences.'

In addition to its warning on inflation, the Central Bank's winter bulletin also contains papers by a number of authors who address different sectors of the economy. Caroline Gavin, for example, assesses the sustainability of the current Irish property boom in Swings in Property Prices: A Global Perspective, whilst Paul McBride reviews developments in the Irish financial sector in the past decade, focusing on the dominant institution in Ireland - banks.

The Central Bank's full Winter Bulletin 2000 may be downloaded at http://www.centralbank.ie/documents/earp/Bulletins/Winter2000Main.pdf