Economists pore over Darling plans
The small print of the Pre-Budget Report will come under scrutiny as economists try to work out the full implications of Alistair Darling's strategy to bring down the country's £178 billion annual deficit.
The Chancellor insisted on Wednesday he would halve the deficit over the next four years in an "orderly way" that would not threaten the recovery. His strategy included a pay squeeze for millions of public sector workers and a national insurance hike.
However he was forced to concede that the recession in Britain was even deeper than previously thought, with the economy shrinking by 4.75% this year compared with the 3.5% he forecast in the Budget in April. And he was accused by the opposition parties of having "ducked" the most difficult decisions, with billions of pounds in public spending cuts delayed until after the general election.
Unions reacted angrily to the news that - apart from the armed forces - public sector pay settlements would be capped at 1% from 2011, while retail price inflation was set to hit 3.5%.
Businesses, meanwhile, warned that the planned doubling of the increase in national insurance contributions - from 0.5% to 1% - for employees, employers and the self-employed from April was effectively a "tax on jobs".
The PBR, which drew the battle lines for an election expected in spring, will be pored over for signs about whether Mr Darling's forecasts are realistic.
Apart from an immediate, one-off, 50% levy on bank bonuses over £25,000 and the planned restoration of the 17.5% VAT rate, the main measures for tackling the deficit will not start to take effect until 2011.
Mr Darling said that while he was "confident" that the economy would begin to grow again by "the turn of the year", confidence remained "fragile" and acting any earlier risked pushing it back into recession.
He said that growth in public spending would be held to an average of 0.8% per year as the deficit was cut from £178 billion this year to £82 billion in 2014-15.
However Mr Darling said that with the current "extraordinary uncertainties", it was "neither sensible nor necessary" to decide now where specific cuts would fall and so there would be not comprehensive spending review before the election.
