The government disclosed in a statement that Minister of Finance Brian Lenihan will now announce the budget on October 14, a move which it stated "reflects the necessary prioritisation of expenditures in the light of expected tax revenues."

The government also hopes that such a decisive move would "give clarity and confidence to investors and taxpayers alike," and provide a sound basis for economic recovery.

"The emerging scale of the economic and fiscal and environmental challenges now facing the country require that the government take the necessary decisions to ensure stability in the public finances, while giving firm support for those aspects of the economy which are continuing to perform strongly, and ensuring that Ireland benefits as early and as fully as possible from improved international economic conditions," the government stated.

At the end of July, the Irish authorities predicted that whole year tax receipts would fall below budget estimates by around EUR3bn. However, new figures have suggested that the shortfall is likely to be far more substantial, in the region of EUR5bn. Declining VAT revenues as a result of weaker consumer spending, and lower capital gains tax revenue, due to the ailing property market are thought to be contributing to the budget shortfall.

The shortfall has prompted much speculation of what tax and spending measures the government will put in place to shore up its fiscal foundations while continuing to offer favourable rates of tax to investors.

The government, for its part, has confirmed that specific initiatives are being developed aimed at "encouraging investment and activity and deepening Ireland’s competitiveness" and that details of these measures will be announced in weeks and months ahead. It also revealed that tax changes to be announced in the 2009 budget next month are already "well advanced."

"Taking decisive action now is critical to our future sustainable growth," commented Lenihan.

"We are better placed than most economies to meet the challenges ahead with our low debt rate, our educated and young workforce, and our low tax environment for workers and business," he added.