The Announcement: A bold firework display to kick off the election campaign that never was

We may have to wait until the publication of the ministerial memoirs to find out whether the combined pre-Budget report and Comprehensive Spending Review really was destined to be the first shot of the 2007 general election – the "campaign that never was".

However, there were moves of such political boldness and economic daring in Alistair Darling's package of measures that it is impossible not to conclude that this collection of what a politician of recent memory might have called "eye catching initiatives" was designed to deliver a fifth consecutive Labour term of office.

Certainly, the measures that have garnered the most attention – on inheritance tax, capital gains tax and the treatment of private equity – were more politically, than economically, significant, though their impact on some sectors of the economy shouldn't be underestimated.

The biggest giveaway yesterday was the raising of the inheritance tax threshold from £300,000 to £600,000, rising to £700,000 in 2010, backdated for all widows and widowers and available to civil partnerships. This measure fell short of the level promised by the Conservatives, who proposed a level of £1m.

Mr Darling had dismissed this as overambitious, yet his proposal was not far short of that, even though the tax lawyers pointed out that the best advised older people were wise to the idea of manipulating tax allowances to save on the "death tax".

Few expected Mr Darling to spend up to £1.4bn a year on this tax break, which will be funded by a duty on non-domiciled citizens (peaking at £800m in 2009) plus capital gains tax reform aimed at the private equity industry (scheduled to pull in another £900m in a few years), aviation tax allowance and the tackling of "income shifting" and other loopholes.

Had it not been for these fireworks we might instead have been wondering at Mr Darling's green credentials, as he moved to borrow some more of his Conservative and Liberal Democrat opponents' clothes in the form of changes to aviation taxation.

Maurice Fitzpatrick, a tax expert at Grant Thornton, was one of many who thought "the move away from the blunt instrument of air passenger duty [APD] makes an awful lot of sense to encourage good behaviour and punish bad". He added: "APD was not particularly effective, only accounting for 1/17th (£2.1bn a year) of green tax yield, whereas this new reform will bring in an additional £520m a year." Moving to taxing flights and companies, rather than passengers and their journeys, was also politically astute. What a pity the opposition can't charge VAT on the ideas that Mr Darling purloins.

Beyond the fun and games with individual taxation, though, the outlook is more grim. The years of plenty for the public finances are over, though things are not quite as straitened as some might have feared. The big picture is that public spending is going to rise by about 2 per cent in real terms over the next few years, about half its recent pace of increase. Areas such as the NHS and schools will probably get the minimum required to keep up with the exacting targets they receive form Whitehall and the growing aspirations of the British people much referred to yesterday.

Given that, tax revenues will naturally be depressed by the credit squeeze and troubles in the City. And with Mr Darling's sudden enthusiasm for tax cutting, albeit of a selective kind, much of the strain is going to be taken by public borrowing, and here there is very little room for manoeuvre.

For the sixth pre-Budget report out of seven, the Government's projections for borrowing will be missed. The Chancellor revised his budget deficit forecast up to £38bn (from £33.7bn in the Budget); with similar rises for succeeding years.

Mr Darling's trademark snowy white hair is about to gently brush the prudent ceiling for the national debt set by the Government – that it should not exceed 40 per cent of the national income. It will be, on the Government's own figures, hovering around 39 per cent for the next few years, and the slightest slip could give Mr Darling a nasty bruise on the bonce.

The cause of such a slip and the silent, ghostly terror sitting behind Mr Darling on the Treasury bench yesterday, is not hard to see – that the slowdown in the UK economy will be more severe, and prolonged than he has indicated. Mr Darling's caution on growth for next year was fully justified, reducing the forecast to a mid point of 2.25 per cent rather than 2.75 per cent. Most City economists put it at 2.2 per cent.

Looking further ahead, Mr Darling's prediction of growth returning to a steady 2.5 to 3 per cent rate from 2009 might seem heroic. In his statement he was at pains to point out that "increased international economic uncertainty and a more fragile global environment" made things unpredictable.

They could easily transpire to deliver 2 per cent growth for a couple of years, and blow Mr Darling's projections out of the water in 2009 – just in time for the real election.