Mr Darling had been left with a "grim"set of public finances by Gordon Brown according to the Ernst & Young ITEM Club which predicts the budget deficit public sector net borrowing will rise from £31 billion last year 2006 07 to £44.5 billion in the current year £6.5 billion more than Darlings forecast in his Pre Budget Report.

However things may not be quite as bad as the ITEM club believes. Thanks to a revision in the numbers and a bumper set of tax receipts during the month by January this years net public sector borrowing was running at £26.5 billion - potentially consistent with Alistair Darlings Pre Budget Report forecast of £38 billion by the end of the tax year.

Nevertheless the Institute for Fiscal Studies IFS Green Budget believes that tax increases equivalent to a rise of at least 2p in the basic rate of tax are needed if the public finances are not to deteriorate further. This is not a fly-by-night axe-grinding commentary. The IFS has repeatedly pointed out recent years that the growth in public spending was not sustainable and would have to be cut sharply. Mr Darlings Comprehensive Spending Review last autumn did just that - cutting the rate of growth in expenditure to just 2.1 less than half previous increases.

The tried and trusted way for governments to avert recession is to spend their way out - you need only look across the Atlantic to US fiscal policy to see this now in action. Ideally the Chancellor should either be looking to put cash back in our pockets or to raise spending at a faster pace.

Unfortunately Mr Darling is in a straitjacket designed by his predecessor strapped down by fiscal rules and by past expenditure levels that have taken borrowing already sharply higher at the very time when the tax take is under pressure. Britain is a unique case. A study by the OECD shows that between 1996 and 2007 16 countries improved their level of public debt compared with the UK giving them the headroom to increase spending or lower taxes to offset the threat of a slowdown.

Indeed the new head of the International Monetary Fund Dominique Strauss-Kahn has called on other countries to follow the US example of a fiscal stimulus package "to get us out of the turmoil we are in". Former US Treasury Secretary Lawrence Summers noted "This is the first time in 25 years that the IMF managing director has called for an increase in fiscal deficits and I regard this as a recognition of the gravity of the situation that we face."

The problem of course is that Mr Brown went to town and how! Gordon Brown left his successor with no room for fiscal expansion in a downturn. Presumably because as you will recall him saying on several occasions "Therell be no return to Tory boom and bust."

The then Chancellor now Prime Minister was deluding himself. Economic cycles happen no matter what Government does. He might as well have been Canute ordering back the waves.

Interest payments on the national debt are now almost as much on an annual basis as the entire defence budget. In his first few years as Chancellor Gordon Brown actually reduced the national debt he had inherited from the previous Conservative Government. However in the past five years it has more than doubled from £315.5 billion in 2001 02 to an estimated £650 billion including the Northern Rock bail-out.

The boom time for public spending is over the overall tax burden will rise and room for discretionary fiscal boosts is assuming Mr Darling continues to play by Gordon Browns rules zero.

The priority for the Government now is to improve the efficiency of spending and of the tax system a vain hope. You can also bet on the pound continuing to fall. A weaker real exchange rate is a valuable part of economic adjustment. In real terms the trade-weighted index is still 12 higher than in early 1993 according to JP Morgan.