National budgets were the responsibility of individual governments, the Minister for Finance told the House. "It is a right that each finance minister of the EU 15 would jealously guard," Mr McCreevy added.

Rejecting Opposition criticism of his response to a reprimand from EU member-states, the Minister said no politician would support subjugating the right of deciding what was best in the policy area for the Irish people.

The Minister said the House could be sure of one thing above all else. "The Government remains fully committed to implementing its Budget as set out in December for the very reason that our policies are the ones which will enable Ireland continue on its successful growth path well into the new millennium.

"In short, the Government's budgetary strategy remains on course."

He added that, contrary to much of the media reporting on Monday, the EU Council had not taken a vote on the issue, and therefore it was wrong to say that other member-states had voted against Ireland. The Fine Gael deputy leader, Mr Jim Mitchell, said it took some arrogance and recklessness to turn an economic miracle into a diplomatic rout, as the Minister had done.

"The jingoism of Norman Tebbit, or the diplomacy of Margaret Thatcher, are no way to deal with the European Union."

Mr Mitchell said the Minister should accept that the European criticism had some validity and that the Government's policies were expansionist and inflationary. "While the Minister is right to want to share the wealth we have created with the people who helped to create it, there are ways of doing it in a non-inflationary and non-expansionary way."

Mr McCreevy said that the Government's economic policy had been successful. "I have made it quite clear, over the past months, that I do not accept the criticism of the European Commission in this regard.

"I regard it as a misreading of the Irish economy. I am supported in that fact by a number of commentators at home and abroad, some of the highest eminence in the economic field."

The Labour spokesman on finance, Mr Derek McDowell, said that damage had been done to Ireland in Europe, and it was not good enough for the Minister to come into the House and pretend otherwise. Mr McCreevy said that most Irish inflation, over the past 25 years, had been caused by external factors. Even the ESRI had calculated last December that the £500 million in tax cuts would have an impact on inflation of 0.13 per cent over the next three years.

"There is no commentator in this country I know of who would say that a tightening of Irish fiscal policy would do anything for inflation, bar if one was to take out a couple of billion pounds out of the Irish economy."

On inflation, the Minister said the latest figures showed that, as measured on the harmonised European basis, it had fallen from 6 per cent in November to 4.6 per cent in December to 3.9 per cent now. "The rate is lower than several other larger member-states on the basis of the latest available data. While month-by-month changes are difficult to predict, I expect the inflation rate to decline further during the course of the year."