Believe it or not, yesterday was the easy part.

By taking the meat cleaver to public spending, Brian Lenihan has demonstrated that he is serious about restoring order to the state finances.

This renewed commitment to fiscal discipline is in stark contrast to some of the other eurozone countries, such as Greece, Italy or Spain -- none of which has yet seriously faced up to their problems.

By making a virtue of necessity, Lenihan has guaranteed that increasingly nervous foreign bond investors will continue to buy Irish Government debt.

With this country set to borrow at least €19bn next year before the cost of bailing Anglo Irish Bank -- estimated at up to €6bn -- is taken into account, the last thing we need is the international bond markets getting an attack of the collywobbles.

praised

Yesterday's savage Budget makes that far less likely. Brian Lenihan's third budget has been universally applauded in international financial circles.

He has been, rightly, praised for taking the tough decisions that some of his European counterparts have ducked.

The 2010 Irish Budget may have many flaws, but a failure to acknowledge reality and act accordingly is not one of them.

After 19 months as Finance Minister, Lenihan has, after an uncertain start, grown into perhaps the most substantial political figure of his generation.

That, unfortunately, was the easy part. While Lenihan has outlined a credible plan to reduce public spending by €10bn during the next three years, and delivered on the first part of it, tax revenues are still on the floor.

Even with all of the extra taxes, the Government has piled on over the past 14 months, it will collect just €31bn next year, down a third on the 2007 peak.

Tax revenues are now back to 2003 levels and show no sign of increasing much above them any time soon.

This is the Achilles heel of his policy. There is no way he can bridge the €25bn gap between spending and revenue entirely through spending cuts.

To do so would end up devastating the economy. For his plan to work, there has to be at least some recovery in revenues.

With the Irish economy amongst the most open in the world, with combined imports and exports being the equivalent of well over 100pc of total economic output, any significant increase in the Government's tax revenues can only come from an international economic recovery.

Unfortunately, the signals here are, at best, mixed. While most of the major European and other global economies have now technically emerged from recession, the "recovery" has been at best anaemic.

In practice, most of them are doing little better than bouncing along the bottom.

Things may have stopped getting worse, but they still aren't getting much better.

Given our dependence on external factors, this is not good news for the Irish economy.

Just to make matters worse, the ECB looks set to start pushing up eurozone interest rates next year. This will have serious implications for the bankrupt Irish banks and the hundreds of thousands of homeowners stuck in negative equity.

deluding

All of which means that, even if the Government goes ahead with its plans to introduce a property tax and water charges in 2011, it could be several years before tax revenues recover to the €38bn-€40bn level needed for Lenihan's plans to work.

The Minister for Finance is deluding himself if he thinks that the hard bit is now over and done with. Things will almost certainly get even tougher before they start to get better.

It is Lenihan's misfortune that any such recovery is unlikely to be felt in this country before 2012, which is, of course, after the next general election.