Charlie McCreevy: gloomy outlook for the next few years.

Political Correspondent

The Finance Ministersaid economic growth rates for the next three years were likely to be significantly less that projected last June. He said a recent meeting of European finance ministers painted a gloomy picture of only marginal growth rates around Europe.

"Growth rates will be very different from those experienced up to the year 2000. Those rates, on which some public expectations are still based, are history," he said.

Mr McCreevy said the tax take will be 1.3bn less than predicted and this would have knock-on

effects for the next few years. We can meet these challenges and succeed if we act to ensure the public finances remain solid. That way we will be well placed to take full advantage of the eventual economic upswing."

He said he was examining ways of securing better value for money to ensure spending increases in this year's budget do not go to waste. He underlined the need for spending to deliver value for money and said the public expected that extra resources should deliver extra services.

He hinted he will lower corporation tax to 12.5%, as planned, to ensure Ireland remained a competitive economy. "A balanced approach is required taking into account our economic needs, the fact that as a small open economy we must retain competitiveness, the much changed financial parameters and the desire to protect the vulnerable.

"The task in the next few weeks is to put that balance together into a sensible and forward-looking package. I will also be looking carefully at preserving our current revenue base. I have introduced many good reliefs and welcome restructuring of the tax system to assist taxpayers."

He insisted the public had not been misled and the Department of

Finance last December predicted a bumpy economic road ahead.

He said the Department, in its budgetary predictions, estimated a deficit of 2.98bn and 3.68bn.