”Brian Cowen obviously feels that today is a good day to bury bad news. Today’s exchequer returns will be overshadowed by the Taoiseach’s resignation announcement, but they will still have long-term political effects that may well be even more significant as Mr. Ahern’s departure.

“Today’s exchequer returns for the first quarter of 2008 show a €600m hole in the Government finances. Tellingly, the Minister for Finance indicates that this shortfall is not likely to be recouped later in the year. This is the first time that he has admitted that his budget arithmetic was flawed, having insisted repeatedly in the Dáil that all was well.

“The income returns under most headings are way below expectations and mean that the new Finance Minister will have to recast the entire budget if he or she is to have any prospect of avoiding a crippling deficit at the end of the year. The Government has taken its eye off the ball when it comes to the economy so there is a danger that our economic challenges will not get the attention they deserve over the period of transition.

“In a sign that property and financial asset markets have been weak during the first quarter, Capital Gains Tax came in a staggering €311m below expectations.

“Most worrying are the VAT returns for January and February, which came in €253m below expectations, which show that the exchequer is reeling from the housing slowdown and the slump in consumer confidence while there is growing evidence that these problems are spreading to the broader economy. For instance, after strong new car sales in the first two months of the year, sales fell by 23% in March, and sales are down 7% for the first quarter compared with the same period in 2007.

“On a positive note, income tax receipts have come in slightly ahead of expectations despite recent increases in unemployment. The Government needs to act quickly to ensure this figure doesn’t weaken significantly.

“Brian Cowen may be favourite to succeed Bertie Ahern, but he will leave office as Minister for Finance with a doubtful legacy. The budget he presented last December has come across at the seams and he does not seem to have prepared a plan B to take account of the changed international and national economic climates. He must shoulder a lot of the responsibility for very poor judgement about the role of the building industry in the economy. His misplaced tax policies created an undue dependence on housing output to deliver economic growth and extra Government revenue.

“I believe it is time to focus political attention on the economy and I hope that today’s events, including these depressing figures, will allow the Dáil to transfer attention from Mr Ahern’s problems to the real economic and financial difficulties facing the country.