Economics:Six months ago in this column, I offered the view that the prevailing consensus among professional forecasters around the near-term performance of the Irish economy was subject to a good deal more downside than upside risk, writes Jim O'Leary.

At the time, forecasts of GNP growth in 2007 were clustered in the range 5-5.5 per cent, and it seemed to me that the assessment of the prospects for consumer spending and house-building on which these forecasts were based was overly optimistic.

And so it has come to pass. Last week, Davy Stockbrokers revised its GNP growth forecast for 2007, down from 5 per cent to 4.5 per cent, largely because of a more downbeat prognosis for residential construction.

At least one other private sector forecaster will shortly follow suit.

However, even these downward-revised numbers may be a bit too sanguine. The Davy forecast still envisages real consumer expenditure growth of 7 per cent this year, an outcome which would be the strongest since 2000 and would, I think, require the spending of an improbably large fraction of maturing SSIAs in order to be realised.

As fascinating as the emerging picture for 2007 undoubtedly is, the much more important questions relate to 2008 and beyond. Davy sees GNP growth decelerating to 3 per cent next year.

The ESRI's latest Quarterly Economic Commentary, which surprisingly left its 2007 forecast broadly unchanged, has GNP growth slowing to 3.9 per cent in 2008.

Goodbody's most recent forecasts, published some time back and due for revision soon, see GNP rising by 3.5 per cent next year.

All of these forecasts invoke the assumption of a soft landing in the housing market. In other words, the slowdown could be a good deal more painful than envisaged.

Meanwhile, in what is looking more and more like a parallel universe, the electorate is being subjected to a steady stream of promises of tax reductions and improvements in public services from the politicians.

As best one can discern, these promises are predicated on average economic growth over the next five years being not much lower than the average for 2002-07.

Of course, it may yet transpire that this is the way things turn out and that the slowdown now under way will prove to be temporary.

Also, we can't be sure, but we should be mindful enough of the economy's frailties, and the risks to which it is now exposed, to be prepared for a future that is a good deal less rosy than this.

In this context, I repeat what I suggested last month, namely that each political party should indicate what it would do in office if economic growth over the next five years decelerated to something like half its recent pace and the growth in tax receipts slowed correspondingly. This is not only because there is an increasingly obvious risk that this is what will happen.

It is also - more importantly - because the current practice whereby each of the parties projects a future benign enough to permit generous spending growth, substantial tax reductions and the maintenance of a healthy budget balance, is effectively emptying the election campaign of any meaningful policy content by allowing the politicians to evade the issue of what their priorities are.

At the risk of over-simplification, the key question for each of the parties is what, in their view of the world, has "first call" on whatever resources are available?

Is it tax reductions? Is it the enhancement of day-to-day public services or is it, as Minister for Finance Brian Cowen suggested earlier this week, the rolling out of the National Development Plan?

Answers to this question would provide a welcome degree of clarity and would also render a valuable service to the democratic process.

At the risk of being excessively self-referential, a final thought. In last month's column, I stated my view that a big challenge for budgetary policy at this time is to improve the efficiency and effectiveness of public expenditure programmes.

Subsequent correspondence brought it home to me that, to people on the left, this is right- wing economist code for public spending cuts. Well, in this case it's not.

I take effectiveness in this context to connote the degree of success of a programme in meeting its objectives, and efficiency to connote the delivery of services at least cost in terms of resources used.

To the extent that there is an "efficiency dividend" to be reaped from reducing waste in the public sector, it is true that that dividend could be used to cut spending, but it is equally true that it could be used to deliver better and/or more wide-ranging public services.

Indeed, the more effective and efficient the public service is and is seen to be, the more supportive of public service provision and the less resistant to paying tax the citizens of the State are likely to be.

That being the case, it seems to me that those who champion public service provision should also be champions of public service effectiveness and efficiency. A wasteful public service is its own worst advertisement.

Oh, and get this: the truly right-wing economist is the one who wants the State to be small and inefficient.

• Jim O'Leary lectures in economics at NUI Maynooth. He can be reached at jim.oleary@nuim.ie