'2p or not 2p' dilemma for Darling » Communities » 24dash.com

Alistair Darling will deliver his first Budget against the backdrop of the most difficult economic conditions for more than a decade.

Hemmed in by the global credit crunch and the high levels of Government debt, Mr Darling is expected to make the best of a difficult hand emphasising his "green" measures, including a "showroom tax" on gas-guzzling 4x4s and the replacement of air passenger duty with a tax on flights.

But he is under severe pressure from the motoring lobby to abandon a planned 2p rise in fuel duty due to come into effect on April 1 as prices at the petrol pumps continue to soar.

Environmental campaigners are urging Mr Darling to stick to his guns and go ahead with the increase as planned.
However, opponents of the increase, sensing a possible eleventh hour climbdown, called on the Chancellor to at least defer any increase to the autumn.

AA president Edmund King said it was becoming the "2p or not 2p" Budget.

"Fuel price instability is damaging to people and the economy and while this is largely influenced by the market, we believe the Government can do more to help people and business weather the financial damage and uncertainty high prices cause," he said.

Liberal Democrat treasury spokesman Vince Cable warned that Britain was facing a "perfect economic storm" with a "high risk" of recession.

The normal remedy for a government in the face of such a slowdown would be to try to kickstart the economy with a package of tax cuts and spending increases designed to stimulate growth.

However, economists warn that the scale of borrowing under Gordon Brown when he was chancellor means that such measures are out of the question if Mr Darling is to stand any chance of meeting his tax and spending rules.