British Finance Minister Gordon Brown may hand out a few mild sweeteners in his budget on Wednesday, the last before an expected election in May, but analysts say tax hikes in future years are likely.
Pouring funds into creaking public services over the current economic cycle has left the Chancellor of the Exchequer little leeway in the next one to meet his fiscal golden rule, which states he may borrow only to invest.
For years critics have been needling Mr Brown on his fiscal stewardship even as his growth forecasts have proved remarkably accurate and as the elusive strong corporate tax revenues he predicted for months are now flowing in.
But analysts say even if Mr Brown sticks to his pledge to offer no big giveaways in his ninth budget, it seems inevitable that taxes will have to go up, perhaps as soon as next year, to get the nation's finances back on a solid footing.
"Whether or not the Golden Rule is technically met in this cycle, the big picture is one of a major deterioration in the fiscal position over the last five years," said Roger Bootle, economic adviser to Deloitte & Touche.
"Accordingly, whoever is Chancellor after the general election is likely to want to put borrowing on a more decisive downward path. We continue to expect post-election tax increases of the order of £10 billion per year."
The Treasury forecast in the November pre-budget report that the current budget, expected to be £12.5 billion in the red in the current fiscal year, will emerge from deficit in 2006/07 and climb further into surplus thereafter.
But independent analysts are still predicting deficits for several more years.
Accountants PricewaterhouseCoopers see red ink on the current budget through to 2007/08 and argue that a "fiscal adjustment" is necessary, either through higher taxes or slower public spending, to get the nation's finances back on track.
But with spending plans mostly locked in until then, higher taxes seem much more likely. But fortunes have turned in Mr Brown's favour since he last took to the dispatch box in December and updated the nation on how much more public money he is spending than taking in.
Since then, corporate tax revenues gushed into government coffers, marking the biggest monthly surplus for January in five years as profits from British companies soared. Royal Dutch/Shell Group recently posted a British corporate profit record of more than £17 billion.
Then last month, national statisticians revised how they measure spending on roads, giving Mr Brown another boost.
That change raised the current budget surplus by a cumulative £2.1 billion in the five years starting 1999/2000, adding to the £8 billion margin that Mr Brown said in December he had on meeting his golden rule.
Mr Brown is not likely to change the overall fiscal arithmetic but could shift funds around to give some modest tax breaks while still meeting his fiscal rules, on which he has staked his reputation.
One possible measure is to raise the threshold for stamp duty, a tax on property purchases, as house prices are 140 per cent higher than when the Labour Party won power in 1997.
At £60,000 the threshold is currently £100,000 less than the average house price and has not been raised since 1993.
While Mr Brown has overshot his borrowing forecasts in nearly every year as Chancellor, his record for predicting economic growth has been particularly accurate.
Britain's economy grew 3.1 per cent in 2004, in the middle of Mr Brown's forecast range. A Reuters poll predicted he won't change his forecast for 2005 of between three and 3.5 per cent growth.
While most economists predict that is still optimistic, some are willing to give him the benefit of the doubt. Even the Opposition Conservative Party has acknowledged that Mr Brown is a good economic forecaster.
"Whereas he has quite a good record on growth forecasts, his fiscal forecasting has been lamentable," Conservative shadow Chancellor Oliver Letwin said.