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Bailout pushes deficit over €7bn

THE GAP between borrowing and spending in the state soared to over €7bn -- a 2pc fall on expectations.

Figures from the Department of Finance show that the Exchequer deficit was pushed up by €3bn which was paid to Anglo Irish and Irish Nationwide as per the commitment to the bank bailout.

Tax receipts in the period were €7.5bn, €136m or 1.8pc below the Government's target.

Two of the main tax earners -- VAT and income tax -- performed weakly, coming in at €179m and €125m under estimate.

Total spending was €10.9bn, €255m below target, and current spending is slightly below projections, but capital spending is more than 11pc short.

Mr Noonan noted that the deficit was "broadly in line" with expectations and the country was on track to meet the target set under the joint EU/IMF programme of financial support.

"While the weakness in certain taxes is a concern, the overall Exchequer targets set in the budget remain valid at this point in the year," he said.

"My department is currently in the process of updating the macro-economic and fiscal outlook in preparation for the submission of our Stability Programme Update to the European Commission by the end of this month."

Some economists were anticipating -- as well as a lower tax take than projected -- an overall Exchequer deficit of around €3.3bn, rather than €7.1bn.