The early announcement of the 2008 Budget (12th March) has been welcomed but it’s no easy task for Darling.

Paul Davies, Ernst & Young's Head of Tax observed: "This year, taxpayers will have a clear indication of the date on which tax changes will be announced and will be able to make an informed decision as to the course of action to take."

"Perhaps this early announcement heralds a new era in certainty and simplicity for taxpayers. It is still early days but what better way for a new Chancellor to distinguish himself."

KPMG’s chief economist, Andrew Smith noted that a neutral package may be the Chancellor’s favoured option: "This is the most difficult budget background since Labour came to power, as the public finances are out of phase with the economic cycle." 

"The Chancellor should be tightening policy to stay within the fiscal rules; but tax increases or public spending cuts would reinforce the economic slowdown expected this year."

"Given current uncertainties it may be best to opt for a neutral package. Cutting taxes looks dangerous on public finance grounds but raising them carries economic risks."