Weak tax revenues continue to put pressure on the Exchequer finances, leading to borrowing of Eur 1.7 billion in the first four months of the year.

The latest Exchequer returns, published by the Department of Finance yesterday, showed that total tax revenues of €8.46 billion in the first four months were 2 per cent below the Revenue Commissioners' expectations for the period. They led to strong Opposition criticism of the Government's handling of the national finances.

Reflecting the poor jobs market, just over €2.54 billion was collected in income tax in the first four months, a 4.4 per cent shortfall on Revenue forecast and almost 7 per cent down on the same period last year.

VAT receipts of €3.37 billion were broadly on target, but excise duty of €1.364 billion was almost 11 per cent behind target, indicating that the Budget day increases may have led to a fall-off in demand. Stamp duty remains ahead of target, reflecting strength in the housing market and increased levies on bank and credit cards.

On the spending side, the figures show a slowdown in the rate of growth. Total voted spending of €9.16 billion was running just over 8 per cent ahead of last year. The total for the first four months was 5.6 per cent below the Department's spending estimate for the period, published in January. This rate of increase is down from 11.6 per cent for the first quarter. A further slowdown in spending growth will be required to meet the Budget target of 6.7 per cent for the year.

The figures show a drop of almost 12 per cent in capital - or investment - spending to €1.035 billion, illustrating cutbacks on major projects.

Labour spokeswoman Ms Joan Bruton claimed that Government economic policy was "now in complete disarray and the economy is suffering as a result".

Referring to yesterday's interview by the Tánaiste, Ms Harney, in Business This Week, she said her comments "show up a Government which is utterly incoherent on the economy".

While the Government wanted to get inflation down, it pushed up the rate by almost 2 per cent through taxes and charges, Ms Bruton said.

"The Tánaiste campaigned against borrowing for investment purposes, yet she now says that Ireland is 'under-borrowed'," Ms Bruton added. Referring to the Tánaiste's call for a reassessment of the way the EU stability and growth pact is implemented, Ms Bruton said that the time for this was before the recent meeting of EU finance ministers, "which effectively parked the issue for the medium term".

The Fine Gael finance spokesperson, Mr Richard Bruton, said that the Government deficit was already reaching "worrying levels" with increasing evidence that this year's Budget was not built on solid foundations.

The Government's decision to squeeze money from the public and from business through stealth taxes was damaging competitiveness and employment, he claimed, while public investment projects were neither on time nor on budget. Crude spending limits on public service providers in the wake of the Government's rapidly expanding public pay commitments were leading to worsening public services in areas such as health, he added.