§ We have got inflation under control. We have also got the public finances under control. The Government have delivered last year's tough public spending plans. Indeed, we expect to undershoot them. However, tax receipts have come in lower than expected this year. That is partly due to lower inflation and to lower growth. The public sector borrowing requirement is the difference between two enormous numbers, so that forecasts for public borrowing have always been notoriously difficult to make—under whatever party. I have therefore been cautious and prudent this year in setting out the latest projections for the PSBR. I now expect the PSBR to be £29 billion in the current financial year. That will be £7 billion less than last year and £16 billion less than two years ago. I am determined to follow a consistent course and I have taken more public spending decisions to keep it that way.
§ I have no intention of throwing away the gains we have made in recent years in getting public borrowing down. We will keep on track towards balance in the medium term because I do not want the future strength of the recovery put at risk. Overall, our decisions on public spending and the tax measures I shall describe shortly will be broadly neutral in their impact on the downward path for the PSBR over the next three years.
§ That downward profile for Government borrowing sets the overall framework for my Budget this year. I am not prepared to take any action that would put at risk my fiscal target of moving towards balance in the medium term. I had to make the difficult judgments and decisions about the balance between the levels of taxation and public spending. This year, as in previous years, I have made those judgments and taken those decisions with the dominant priority of improving the long-term health of the British economy. Our tax and spending policies must promote our aim of becoming the enterprise centre of Europe.