"It was an unexciting Budget, a deliberately dull package, and I think it will be very unpopular, especially in the short term.

"The finances are clearly tight so Alistair Darling has ended up doing very little. In simple terms he gave away a billion pounds to pensioners in the form of winter fuel allowances and to families with children in the form of increased child benefit and tax credits, designed to help the Government get close to its target for reducing child poverty. That billion pounds was paid for by drinkers, drivers and tax-avoiders.

"The drink taxes will raise about £400 million this year. There are also a list of measures against tax avoidance which the Treasury is banking on raising around £600 million. From next year the tax on gas-guzzlers will raise half a billion pounds. So it's a neutral Budget this year – actually there's a slight gain to the taxpayer – but next year the tax take goes up by £800 million and the following year by £1.8 billion.

"So the Chancellor has chosen not to put up taxes this year – clearly because the economy is slowing down. But he also faces much lower tax receipts so he has borrowed more. For next year he's increased the already massive net borrowing figure of £36 billion to £43 billion, overnight, and that's how he intends to pay for the slowdown of the economy. He's taken the easy option, by borrowing.

"He was very fortunate today in that Gordon Brown has already ruled out an election for this year as far as we know. There are those in the Labour Party who would like to go for one next summer but a lot of things have to happen. In a way, he is gambling on the economy recovering by the middle of next year. If it does he might even be able to build up an election war chest – but only if everything goes right."

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