Alistair Darling pronounced the economy over which he is now presiding as "in good nick".

"The economy is strong and stable; we've had 10 years' growth, but of course there'll be challenges to come," he said. The chancellor sees some potential shoals ahead, however. He was worried that the fall in the numbers on benefits had reached a plateau and that many households would soon face big increases in their mortgage payments as their two-year fixed rates expired. "What you don't want are people to suddenly find that their outgoings have gone up quite dramatically because that will have an impact on what they do with the rest of their money." He is to look again at the mortgage market and use some of the ideas proposed in the 2004 report by David Miles, the Morgan Stanley economist.