‘Nothing to help short-term growth’

Roger Bootle said the plethora of measures aimed at increasing activity would only be successful in the medium term, with short term growth a hostage to aggregate demand.

“The economic backdrop remains extremely challenging,” said the chief economist at Deloitte, the professional services firm. “It would not be difficult to imagine growth turning out much weaker, and therefore borrowing higher, than in the Government’s plans.

“This is particularly true given that higher inflation threatens to tip the Monetary Policy Committee into raising interest rates prematurely – at just the time that consumers’ real incomes are under serious pressure.”

Ratings agency Fitch warned that the Government may need to take more fiscal tightening measures if growth proves weaker than forecast.

“As expected, the measures announced in the Budget were fiscally neutral,” said David Riley, Fitch’s head of sovereign ratings.

“But if the economic recovery proves weaker than projected, future Budgets may require additional measures to ensure that the government meets it ambitious fiscal targets.”

Preserving the triple-A sovereign debt rating that Britain enjoys from the major ratings agencies is a top economic priority for the Government.

However, the ratings agency sounded a note of caution about Britain’s economic outlook. “The medium-term economic forecasts still appear relatively optimistic in Fitch’s opinion,” it added.