Tax shortfall may wipe out budget surplus

The Government has been warned that it's tax shortfall this year could be even greater than forecast.

The warning comes on foot of a statement by the Taoiseach yesterday in which he said the Government would not be reneging on tax commitments because of its expected £1bn shortfall in the Exchequer surplus.

The AIB has claimed the £1bn estimate may be underestimated.

Oliver Mangan, the chief economist of AIB Group Treasury, said the shortfall in tax may be up to £2bn, possibly wiping out the budget surplus altogether.

Meanwhile, Jim O'Leary, chief economist of Davy Stockbrokers, has warned the slowdown appeared so fast the growth rate could be zero by the end of the year.

More bad news for the Government came from the Purchasing Managers Index published by the NCB yesterday, which noted a clear weakness in the sectors of technology and tourism.

But the Taoiseach, talking last night, said we should not be talking down the best economy in Europe.