The 2008 Budget comes amid the gloomiest economic situation for more than a decade, with volatile global stock markets, a credit crunch, falling house prices and the continuing uncertainty over the future of Northern Rock.

On Wednesday, experts at the Institute of Fiscal Studies said Mr Darling will have to raise taxes by £8 billion - equivalent to about 2p on income tax - to avoid breaking the Government's self-imposed fiscal rules over the coming five years.

But the Chancellor will pen the Budget with one eye on a General Election widely expected to take place in the spring of next year.

If Prime Minister Gordon Brown decides to go to the polls in early 2009, the impact of decisions announced in March will be being felt by voters in the months before they cast their ballots.