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Ed Crooks: Pre-budget report drawn up in very difficult economic circumstances

Chancellor Gordon Brown is expected to reveal a sharply downgraded figure for economic growth when he delivers his long-awaited pre-budget statement in the Commons.

The chancellor is also expected to increase borrowing to meet current spending commitments.

Rosemary Radcliffe of PriceWaterhouseCoopers and manufacturer Colin Perry discuss what businesses expect from the Chancellor

Mr Brown has told his cabinet colleagues he wanted to promote national and international economic stability, improve Britain's productivity, encourage and reward work and create a fairer society.

Mr Brown's statement comes amid union and employer pressure for a cut in interest rates, which they say is needed to avoid a recession.

Mr Brown is likely to stand firm on £40bn spending plans

It is believed the chancellor will estimate growth at about 1%, compared with the 1.75% - 2.25% forecast in the Budget in March.

In the statement - expected to last 30 minutes - Mr Brown will reiterate that his £40bn spending plans for schools and hospitals remains secure, despite the Tories' warning of a £36bn "black hole" in the public finances.

BBC Economics Correspondent Ed Crooks on what to expect from the pre-Budget speech

He will insist the government will meet its "golden rule" of only borrowing to invest over the course of the economic cycle.

The themes of his statement are summed up in the title of the accompanying report, Steering a Stable Course for Lasting Prosperity.

The chancellor is also expected to unveil plans echoing Margaret Thatcher's dream for the UK to become a nation of shareholders.

'Black hole'

Francis Maude: "Black hole in Brown's spending plans"

Speaking on BBC Radio 4's Today programme, the shadow chancellor Francis Maude said he had no doubt that there was a black hole in the public finances.

The only question, he said, is how is Mr Brown going to fill it?

"Is he going to fill it by cutting services, cutting spending? Is he going to fill it by raising taxes?"

Mr Maude added that if the chancellor were to increase borrowing there would be an "enormous" price to pay. He estimated that borrowing £30bn would put "at least" 0.75% on interest rates.

Liberal Democrat Treasury spokesman Malcolm Bruce welcomed Mr Brown's adherence to his spending commitments but told Today the chancellor had to "stop blaming everybody but himself" for the economic downturn.

Nation of shareholders

Echoing Mrs Thatcher's 1980s dream of a nation of shareholders, Mr Brown will unveil plans for tax breaks for employees who buy shares in their companies and private savers who invest in small firms.

Mr Brown believes that encouraging workers to buy a stake in their firms is good for productivity and will also help break the barriers between workers and bosses.

The chancellor's pre-budget statement is also thought to include:

• A drive to reduce the number of public sector workers taking days off sick.
  
• A fresh declaration from the chancellor that the government is taking "a prudent and cautious" approach to managing public finances.
  
• A proposed consultation exercise on improving productivity and a series of labour market reforms to increase employment opportunities.
  
• Possible details of a new energy tax.
  
• Changes in the vehicle excise system that will mean bigger bills for gas-guzzling cars.
  
• News of higher taxes for company cars, with rules penalising those with higher personal mileage.
  

Government debate

Steering a Stable Course for Lasting Prosperity has four main themes - promoting national and international stability; increasing productivity; encouraging and rewarding work; and creating a fairer society and protecting the environment.

The idea of a statement ahead of the full Budget is to allow time for an extensive debate on government economic policies.