A significant focus of the Budget centred on the state of the UK economy, caught, as it is, between a massive government deficit and a still hesitant business recovery.
Happily for the Chancellor, he was able to point to a lower than predicted rate of government borrowing for the year.
On the back of better than expected tax receipts and with spending in line with forecasts, the Chancellor announced that government borrowing will be £167 billion this year, £11 billion less than the previous estimate.
For future years, the Chancellor predicted borrowing would stand at £163 billion in 2011, £131 billion in 2011/2012 and £110 billion in 2013/14, before reaching £74 billion in 2014/15.
The reduction in the budget deficit will halve – from 11.8 per cent of GDP to 5.2 per cent – over a four-year period, he said, adding that the structural deficit will fall by two-thirds by the end of the next parliament.
Less happily, Mr Darling was forced to revise downwards his prediction for 2011 growth rates to between 3 per cent and 3.5 per cent. He maintained that growth for 2010 would match forecasts of between 1 per cent and 1.5 per cent.
On government spending, public sector pay settlements are to be held at a maximum of 1 per cent for two years from 2011, while Whitehall departments are to make £11 billion worth of efficiency savings.
The Chancellor said that spending would increase in real terms by 2.2 per cent next year as already planned but that the next spending settlement, from 2011 onwards, would be the “toughest for decades”.