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Outlook: Public finances look recession-proof

THE CHANCELLOR'S pre-Budget statement has drawn fire on two fronts. His forecasting is criticised for being wildly optimistic, and therefore giving a false impression of the state of the public finances, and his package of "enterprise" measures are seen by some as little more than hot air.

Gordon Brown is perfectly capable of defending himself, but in point of fact both salvos seem wide of the mark. Mr Brown is certainly being unrealistic about growth, but the central thrust of his forecast - that there won't be a recession as such - is probably correct.

What's more, the relationship between revenue and growth is becoming less clear. At present, revenues are defying even the most optimistic of the Government's predictions. And even if in the downturn they defy its worst, the public finances are not going to look that bad.

The starred first for management of the public purse once promised may now be beyond the Chancellor's reach, but however bad the economy gets, he's still heading for an eminently respectable 2:1. Certainly the public finances are much better placed to withstand a bad recession than they were in either of the previous two. As for the enterprise package, even hot air is better than nothing, and if Gordon Brown can deliver on just a tenth of his rhetoric, he'll be doing well.