The strategy is to finance a short-term giveaway with a long-term rise in income taxes. It is doubtful that this will amount to much of a “stimulus” to spending and activity.

The changes to national insurance were a major surprise, raising £3.8 billion in 2011-12. Other measures targeting top earners will garner a further £2.2 billion in that year.

The economic forecasts underlying the fiscal projections are optimistic – GDP falls by just 0.25% in 2008-09 and 0.5% in 2009-10 before climbing 2% in 2010-11 and 3% in 2011-12. This implies a mild recession by historical standards, against emerging evidence.

A key risk is that the economy has not regained sufficient momentum by 2010 to withstand programmed large tax rises. Government debt will embark on an explosive path if these increases are postponed.

The VAT cut contributes to the annual RPI change moving deep into negative territory – minus 2.25% by September 2009. However, a rapid rebound is then forecast, to 2.5% in September 2010, with the VAT reversal and higher excise duties contributing.

Servicing the growing debt eats significantly into resources – debt interest is forecast to rise from 1.3% of GDP in 2009-10 to 2.5% in 2012-13. The risk is of a larger increase as huge near-term borrowing needs put upward pressure on real yields.

Total debt issuance by the Debt Management Office is now projected at £161 billion, more than double the Budget forecast of £79 billion. The authorities have rejected advice to “underfund” the deficit in order to boost dangerously low broad money growth.