Alistair Darling is expected to deliver a gloomy prognosis for the economy when he presents his first Budget as Chancellor tomorrow.

There will be headline-grabbing measures such as a clampdown on energy companies which impose higher prices on households using meters to pay for fuel.

But Mr Darling is expected to warn the economy is growing more slowly than predicted and unemployment could increase over 12 months.

What will be missing are major public spending announcements of the type seen during the early years of Tony Blair's premiership.

Mr Darling is expected to announce tax revenues have been lower than predicted, and economists expect him to borrow as much as £42 billion in 2008-09 - a £6 billion increase on previous plans.

Plans to widen the M6 between Birmingham and Manchester became a victim of the spending squeeze when effectively scrapped last week.

Government departments have all been told to save money, and yesterday were warned by Gordon Brown, the Prime Minister, they must be prepared to reform.

The comments prompted trade unions to warn public services would get worse rather than better if forced to make efficiency savings.

Dave Prentis, general secretary of Unison, said: "They are struggling to maintain minimal standards in the face of rising demands, shrinking resources and staffing levels, and little or no training."

But Mr Darling is under pressure from Labour MPs to reduce child poverty and worklessness in deprived areas.

He is expected to announce changes to the tax credit system to help working families.

Business leaders in Birmingham last night urged the Chancellor to scrap plans for a tax hike on petrol, to help industry.

Birmingham Chamber of Commerce and Industry said employers in the city needed more government support to help them cope with a predicted downturn in the economy.

They urged Mr Darling to scrap plans to increase petrol duty by 2p next month, and called for tax cuts for small businesses with turnovers of less than £300,000.

Charlotte Ritchie, head of policy at Birmingham Chamber of Commerce and Industry, said planned tax increases could make the problem worse.

She said: "While the Government's rhetoric is pro-business, the small print is often the opposite.

"We hope that the Chancellor will use this Budget to restore the faith of our local businesses."

Tomorrow's announcements are expected to include a fairer deal for households using meters to pay for electricity and gas.

At the moment, the 3.8 million electricity customers and 2.8 million gas customers who use pre-payment meters have to pay higher prices than those who pay monthly.

But Mr Darling is expected to ban energy companies from charging them more.

Households using pre-payment meters pay an estimated £255 a year more than those who pay their bills in other ways -

but they also tend to be less wealthy. The Chancellor is also expected to announce a big increase in vehicle excise duty for gas-guzzling cars, with road taxes for the least fuel-efficient vehicles of up to £1,000 for the first year.

The measures will include incentives to companies opting for greener fleets.

There will also be higher duties on alcohol, but the Chancellor will reject Tory proposals to increase taxes specifically on strong drinks such as alcopops, and to reduce them for those with a low alcohol volume.

Mr Darling will also announce concessions on his plans to impose a £30,000 levy on long-term non-domiciles residents in Britain, including a deal with Washington to ensure the levy can be offset against US tax.

However, the Chancellor will have little room for manoeuvre with economists united in predicting a difficult period ahead.

He is expected to admit the economy is growing more slowly than expected, and revise his prediction for economic growth down from about two per cent to about 1.75 per cent. Tax revenues have also been lower than predicted, which means Mr Darling may be forced to borrow more than planned.