UK Chancellor Gordon Brown's forthcoming Pre-Budget Report will have to deal with a sharp deterioration in fiscal conditions, with government borrowing about to rise sharply. Figures for the first half of the financial year already show a borrowing overshoot of some £5bn (€8bn).

There are fears of further rises in business taxes, on top of the National Insurance burden imposed in last spring's Budget and scheduled to take effect from next April. Sluggish economic growth is holding back the growth of revenues and bringing an end to the long and balmy period in which taxes always seemed to roll in faster than expected.