British Budgets are not what they were. Much of the job of steering the economy has shifted from fiscal to monetary policy and therefore to the Bank of England. Interest rates and exchange rates now play a greater role than the modest changes in taxes and spending that used to be the centrepiece of economic policy. In fiscal policy itself the fine-tuning philosophy has been replaced by long-term guidelines. The main influence on the tax-take is now the public expenditure review, which is supposed to determine spending three years ahead and is published at a different time to the chancellor’s Budget statement. The latter must, in Bagehot’s terminology, now be regarded as part of the dignified rather than the effective part of economic policy.

These underlying factors have been reinforced this year by the worldwide credit crunch. Even the greatest fiscal nostalgic will have to admit that both the world and the UK economic outlook depend far more on the success of the efforts of the US Federal Reserve and other central banks to inject funds into the banking system than on modest fiscal adjustments in any one European country. If these efforts succeed and worldwide financial pressures begin to ease in the second half of this year, as the Treasury documents assume, then the overall shape of the Budget is right, whatever one thinks of the control freak adjustments of detail so beloved by Gordon Brown, the prime minister. The UK economy is already working close to capacity, inflationary expectations have increased and there is no case for a discretionary stimulus.