There are increasing signs of the tensions between Ireland and our European partners which can only build as the advent of the euro approaches. Both the German finance minister, Mr Theo Waigel, and the president of the European Central Bank, Mr Wim Duisenberg, warned this week of the danger of the economy overheating and Mr Duisenberg was outspoken on the need for a tight Budget policy to offset the fall in Irish interest rates.

The Minister for Finance, Mr McCreevy, however, looks to be getting a bit irritated at all the lecturing. There may be risks that parts of the economy may overheat, but it is a bit rich for our European partners to be lecturing us on running a tight budget policy at a time when the budget surplus this year is heading towards £1 billion.

The truth is that the kind of tightening necessary in budget policy to have an impact on the overall level of economic activity would be politically impossible and probably economically unwise as it would involve cutting spending and increasing taxes. Also, as the Economic and Social Research Institute has pointed out, such a strategy could quite easily backfire by leading to a collapse in social partnership and a further spiral in wage claims.

Certainly, Mr McCreevy should not unveil the kind of generous cuts given in the 1998 budget to the benefit of the better off. But the Government has already indicated that it will aim the bulk of the benefits at the less well off, sensing that this will both appease the trade unions and keep our European partners from moaning too much. But will it please Ms Mary Harney, who will no doubt want to deliver a further cut in the top income tax rate to please the PD constituency?