The man at the helm of Britain's public finances has room to appease government critics without forcing interest rates higher when he outlines his tax and spending plans tomorrow, economists say.
The Chancellor of the Exchequer, Mr Gordon Brown, is under intense pressure from high-profile groups to raise pensions and cut fuel duties when he delivers his pre-budget report to parliament.
That pressure has been exacerbated by widespread reports that Mr Brown is sitting on a huge budget surplus, thanks largely to his typically prudent forecasts at the time of the last budget in March.
But barring a highly uncharacteristic major give-away by the cautious Scot, it is unlikely that there will be anything in tomorrow's report - which largely previews proposed changes in the next budget - to alarm the inflation-wary Bank of England.
"The Bank [of England] isn't going to react to a little extra spending by the Chancellor.
"There may be a modest fiscal loosening but the overall fiscal stance will be much tighter than the March budget predicted," said Mr Jonathan Loynes, chief UK economist at Capital Economics.
The bank's interest rate-setting monetary policy committee (MPC) has kept the cost of borrowing unchanged at 6 per cent since February and the growing feeling in financial markets is that rates have peaked or will inch up only slightly next year.
The MPC meets tomorrow and Thursday to decide on rates and has already been briefed on the likely contents of Mr Brown's report.
The government spent much of last week playing down expectations of a large reduction in fuel duties and warning that the budget surplus was nowhere near as large as some were predicting.
Mr Brown forecast a 2000-2001 budget surplus of £5 billion sterling (€8.33 billion) in his March budget but most economists reckon he will end the fiscal year with about three times that amount, dragging an extra £10 billion out of the economy.
"It is hard to see the public finances as anything other than extraordinarily strong," economist Mr Robert Barrie wrote in a recent research note for Credit Suisse First Boston. According to Mr Loynes, Mr Brown has at least £5 billion more at his disposal than he anticipated in March, which could be spent without forcing up interest rates.
Theoretically, the money could be used to lower petrol and diesel duties by about 10p a litre - less than half of what fuel protesters have called for - or raise weekly pensions by 10 per cent to appease pensioners outraged by this year's miserly 75p per week increase.
But even allowing for the customary pre-announcement government spin to drive expectations lower, few expect the Chancellor to be that generous when he delivers the report.
Instead, Mr Loynes predicts a £1£2 billion package comprising a more modest fuel duties cut and pensions increase, combined with some extra money to help the health service ride out a possible winter flu outbreak.
