Chancellor Gordon Brown repeated his now well-worn routine of hailing the "longest period of sustained growth" in British economic history yesterday.
But once we got into the small print of his pre-Budget statement, the outlook for the country's public finances looked far less assured.
The Chancellor raised his forecast for economic expansion this year from between 2-2.5 per cent to 2.75 per cent.
And he left his forecast for 2007 unchanged at between 2.75 per cent and 3.25 per cent. But he downgraded expectations for growth in 2008 to between 2.5 per cent and three per cent.
Mr Brown was also forced to revise his estimates for public borrowing and the size of the Budget deficit, a key part of his "golden rule" which says the Government should only borrow money for investment over the economic cycle so that current public spending should not exceed current tax revenues.
In his tenth – and almost certainly his final – pre-Budget report, Mr Brown said he was still on target to meet his fiscal rules. But he revealed that the Government would borrow more than expected at the time of the March Budget while the deficit would not fall as much as hoped.
Howard Archer, chief UK and European economist at Global Insight, said: "This was a pre-Budget report of a Chancellor with his eyes firmly on talking over the top job in 2007 but with limited overall room for manoeuvre given the fragile state of the public finances."
The rise in the growth estimate from last year's modest downturn was despite adverse factors such as high oil and commodity prices.
"The 2007 projection looks pretty optimistic to us, given anticipated slower global growth over the coming months," Mr Archer said.
Angus McCrone, of the Centre for Economics and Business Research, agreed.
"We welcome the more cautious figures on the public finances," he said. "However they may well not be quite cautious enough - because Brown’s economic growth forecasts for 2007 and 2008 look too rosy, given the slowdown that is starting in the US and will spread, we think, to other economies.
"We think next year’s figure will be nearer to 2.4 per cent. His 2008 prediction is quarter of a point lower than he forecast last spring, but we think it is still too high."
Last year, Mr Brown was forced into an embarrassing downgrading of his forecasts after months of similar warnings.
Shadow Chancellor George Osborne attacked the Chancellor today for presiding over an economy that was growing at a slower rate than 21 of the 25 members of the European Union.
"With this Pre-Budget Report, like the nine before it, Britain is moving further from the direction in which we need to go," said Mr Osborne.
Mr Brown said he would borrow #36.8 billion this year and #31 billion in 2007 compared with forecast of #36 billion and #30 billion in March.
Then, Mr Brown said he would cut the budget deficit from #11.4 billion last year to #7 billion this year. But yesterday he predicted the shortfall would in fact turn out to be #7.9 billion.
He also confessed that last year’s deficit was in fact #15.1 billion - #3.7 billion worse than originally expected.
Investec Securities economist David Page said Mr Brown’s outlook was "relatively optimistic" and warned that if the economy did not grow as the Chancellor hoped further revisions would be required while the Ernst & Young Item Club said a budget deficit more in the order of #11 billion was likely this year.
David Kern, economic adviser to the British Chambers of Commerce (BCC), said economic growth of 2.75 per cent this year was "very realistic".
But he added: "We believe the Chancellor’s growth forecast for 2007 is unduly ambitious and is well above the 2.3 per cent to 2.4 per cent consensus forecasts of most private sector economists.
"We believe the pace of UK growth is set to slow over the next year, because disposable incomes are being squeezed, global prospects are worsening, while sterling and interest rates have risen and could go up further."
Mr Kern added: "Mr Brown’s forecasts for public finances also appear too ambitious. Though he acknowledged some deterioration compared with his March Budget forecasts, the improvement he expects in future years are questionable.
"The forecasts given in today’s Pre-Budget Report do not remove the threat of future tax increases."
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More Birmingham Post pre-Budget stories:
>> Brown blasted for 'feeble' report
>> Brown fails to go green
>> Sir Digby sets sights on skills
>> Political Editor Jonathan Walker gives his opinion
>> Birmingham Chamber of Commerce & Industry's reaction
>> Air fares to rise
>> Pension fear over u-turn
>> Brown cautious but not frugal
>> Read Gordon Brown's speech in full
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