The figures contained in the pre-Budget White Paper are far stronger than many had predicted.

The opening 1999 Exchequer surplus - the expected excess of revenue over spending - is a massive £1.37 billion, about £300 million more than most had expected.

After the Budget, Mr McCreevy now has freedom to target a surplus in 1999 varying from £1 billion to £1.2 billion and still deliver a Budget at the top end of most people's expectations.

A surplus of this magnitude would go a long way to stemming criticism from the European Commission or the European Central Bank that the Government is pumping too much money into the economy.

The main reason why the Minister has so much extra money to play with is the Department of Finance's complete change in estimating tax revenues.

In almost every recent year the Department has been conservative and has substantially underestimated the amount of tax growth in the economy. This year the underestimation came to no less than £1 billion.

However, this year, for the first time, it appears that the Department is being upbeat, forecasting a 9.5 per cent growth in tax revenue in 1999, or an underlying growth of some 10.8 per cent.

That points to a very buoyant economy next year, with growth of around 10 per cent, employment growing by perhaps 5 per cent and wages by around the same level.

On Budget Day, Mr McCreevy will stand up with an opening surplus of £1.37 billion, leaving him substantial room for manoeuvre.

For example, he could increase spending by £125 million, mostly on social welfare and a package for old age pensioners, and produce a tax package of £500 million plus in the full year or about £270 million in 1999. Then, allowing for "tax buoyancy" of £100 million - the extra amount written in Budget Day resulting from the extra activity the Budget will stimulate - he could still target a surplus of close to £1.2 billion.

And an even more generous package is also possible from the figures. Targeting an overall surplus of around £1 billion would allow the Minister to deliver a tax cutting package of around £600 million in a full year, increase spending by around £250 million with a package of indirect tax increases of close to £100 million.

The main spending on Budget Day is likely to be on social welfare and on old age pensioners in particular. A weekly rise of £5 to £6 is on the cards. Increased personal allowances for pensioners - and higher exemption limits allowing more old people to move out of the tax net completely - are expected, as well as a package aimed at carers.

Significant changes are expected in personal taxes, while the standard corporation tax rate of 32 per cent is likely to fall by 4 percentage points, with a view of moving to 12.5 per cent for all companies within nine years.

The final details of the income tax package will only be worked out this weekend, with a significant increase in tax allowances and at least 1 percentage point off the standard rate seen as very likely.

It is also likely that a compromise on tax credits will be agreed, with the Minister opting to allow relief on the £800 PAYE allowance only at the standard rate.

A substantial package targeted at the housing market is also expected, with new measures aimed at student accommodation, the Dublin docklands and boosting the supply of development land all expected.