For the second time this year Gordon Brown was able to taunt the Opposition front bench and his critics in the City alike with the news that he had hit his ambitious growth forecast.
The Chancellor said gross domestic product growth would come in at 3.25 per cent this year, smack in the middle of the range of 3 to 3.5 per cent that he set 20 months ago.
When he first pencilled in that forecast in April 2003 it was greeted with derision. Stock markets had just hit new lows and US and UK forces were still polishing off resistance to their invasion of Iraq.
But yesterday Mr Brown told Labour's jubilant back benches: "In last year's Budget I forecast growth for this year between 3 and 3.5 per cent.
"When I made our forecast, the Leader of the Opposition said it was not just wrong but a deliberate misrepresentation of Britain's economic position and not to meet it would destroy credibility. I can report today that growth this year will be, as I forecast, above 3 per cent."
He also stuck to his forecast for a repeat of that growth rate in 2005 - a prediction that today meets similar levels of scepticism in the City. He also reiterated his forecast of 2.5 to 3 per cent for 2006 and for the first time forecast growth in 2007 at 2.25 to 2.75 per cent. This leaves him as one of the country's most optimistic forecasters. No major institution or think-tank sees growth at or above 3 per cent, and the average is just 2.5 per cent.
"The economic growth assumptions still look very toppish," said Ken Wattret, an economist at BNP Paribas, which expected growth of just 2 per cent next year.
"He is setting a very optimistic economic backdrop ahead of what is expected to be a spring 2005 general election."
However, in a section buried within the 200-page pre-Budget report, the Treasury admitted for the first time that a "sharp correction [in house prices] cannot be ruled out".
But the devil is in the detail, and analysts were swiftly swarming over the breakdown of economic growth across the economy.
They showed that the Treasury had offset a cut in the outlook for manufacturing and exports - probably linked to the strength of the pound - with an increase in government spending and investment across the economy.
In 2006, a downward revision to household consumption was again offset by government spending.
The Chancellor seized on the low levels of inflation, which will average 1.25 per cent this year and is not predicted to hit the 2 per cent target until 2006, as a sign of strength.
"In any other decade, a 100 per cent increase in oil prices, a 50 per cent rise in industrial materials prices and a 70 per cent rise in metal prices would have led to inflation and instability," he said.Reuse content