Furthermore, the immediate outlook is for better still. From 1 April, the Inland Revenue begins the process of switching to quarterly payments of corporation tax. The effect of this will be to give the Chancellor a one-off cash-flow benefit of pounds 1.5bn in the first year, rising to pounds 5bn over five years. Also already announced for next financial year, there's an extra pounds 1.5bn from the phased abolition of tax credits on dividends, pounds 1bn from the abolition of profit-related pay, and pounds 1.5bn in extra excise duties.
There is, of course, another side to the balance sheet - government spending. One of the reasons for the present buoyancy in the figures is that, inexplicably, government spending is coming in lower than forecast. That cannot last, and in any case, announced extra spending on health and education begins to kick in with a vengeance from next fiscal year onwards. All the same, it is looking more and more possible that the Chancellor will be able to maintain a budget surplus right through the very worse that the present downturn in the business cycle has to throw at him.
By any stretch, this is a truly remarkable state of affairs. The general assumption in the City is that the overall fiscal stance of the Budget will be neutral, though the Monetary Policy Committee's decision to leave interest rates unchanged, taken this week with prior knowledge of the broad fiscal outline of the budget, might suggest otherwise. Even so, it is plain that whatever giveaway might be forthcoming, it is not going to be a significant one. The fiscal cannon is recharged, but for the time being, the Chancellor is not tempted to fire it.
The cynical view, as well as the almost certainly correct one, is that the Chancellor is simply waiting for the run-up to the next election, when voters will be pump-primed in the traditional manner. But actually there is no urgent need, as things stand, to provide the economy with a fresh fiscal stimulus. Perhaps surprisingly, though not to readers of this column, Britain looks as if will avoid a fully fledged recession - as defined by two consecutive quarters of negative growth.
The good news from the US yesterday was that the American economic miracle continues unabated. Despite the booming economy and tight labour market, wage pressure remains in abeyance. There's no sign of inflation and therefore no immediate need for the Federal Reserve to raise interest rates. No wonder President Clinton survived the Monica Lewinsky affair. For an explanation of why he remains one of the most popular presidents in US history, look no further than the Dow at 9,665.Reuse content