Chancellor Gordon Brown has staked his reputation - and his future claim to the premiership - on an economic bounce back after being forced to halve his forecast for UK growth this year.
At the same time he has again demonstrated his formidable political skills with a package promising tightening government expenditure coupled with a doubling of tax on the profits of the North Sea oil companies to help finance new help for pensioners and first-time home buyers, while enabling him to freeze duty on petrol and diesel.
The North Sea oil tax is likely to hit several oil companies, including Irish exploration stock Tullow, whose shares fell by 2 per cent yesterday.
As the Conservative Party finally elects a new leader, Mr Brown has also signalled his own long-term ambition, and determination, with the creation of a new National Sports Foundation to help boost preparations for the 2012 Olympics in London and England's bid to host the 2018 World Cup.
In his annual pre-budget report to MPs Mr Brown finally bowed to predictions of a slowing economy by slashing his forecast for growth in 2005 to just 1.75 per cent, compared to the buoyant 3 per cent to 3.5 per cent predicted in his budget last spring.
The chancellor placed the British economy's "toughest and most challenging year" in the context of high oil and commodity prices, while proclaiming the 34th quarter of growth under a Labour government and predicting the economy would pick up, with growth next year of 2 to 2.5 per cent rising to between 2.75 per cent and 3.25 per cent in the two years after that.
Confirming that net borrowing this year would rise to £37 billion (€55 billion) - £5 billion more than forecast in the budget - Mr Brown also maintained it would fall back in subsequent years to £34 billion, £26 billion, £23 billion and £22 billion, and that the government would meet its "golden rule" over the current economic cycle with a £16 billion surplus.
However, as the opposition parties at Westminster predictably mocked the chancellor for having got his sums wrong, economists were also warning that he risks further embarrassment over his growth targets.
Investec economist David Page expressed surprise at the chancellor's predictions for stronger growth from next year, saying: "We think he has too rosy a view as the euro zone has question marks over it and the global economy could be softer than the treasury is looking at."
Standard Chartered economist Gavin Redknap said it was misleading for the chancellor to blame high oil and commodity prices as these should stabilise next year. "The fact that the treasury now expects growth to remain weak in 2006 suggests something longer-lasting and more worrying at work," he said.
In the Commons the Liberal Democrat spokesman Vince Cable echoed the complaint, accusing the chancellor of trying to "blag his way through by blaming the problems on the oil producers and slow-growing Europe."
The UK, he said, was now in the middle of "a growth recession", and instead of demonstrating "his talent for producing rabbits from hats", Mr Cable suggested the chancellor might have consulted 10 Downing Street about "how to do humility."
However there was nothing humble about Mr Brown as he declared: "As chancellor I have always understood that the strength of a monetary and fiscal regime is how it performs, not just in the good years but in this, the toughest and most challenging year for the economy."
To Labour cheers he carried the attack to the Tories, trumpeting: "This year we have seen inflation not above 10 per cent but around 2 per cent; interest rates not rising above 10 per cent but peaking below 5 per cent; unemployment, not as in the past at record highs, but at record lows; not the economy in recession but growth, even in this toughest year at 1.75 per cent."
His Conservative shadow George Osborne, campaign manager for leadership favourite David Cameron, ridiculed the chancellor's rehearsal of the economic statistics as sounding "more like the tractor production figures from the old Soviet Union."
