Crunch time for Gordon Brown

Chancellor Gordon Brown is to focus Tuesday's pre-Budget report on the state of the economy and how to improve public services.

He is expected to indicate that the National Health Service (NHS) and schools will receive a substantial hand-out in future spending decisions.

A Treasury review - to be published as part of the pre-Budget report - will warn of the need for a huge cash injection into the NHS.

Mr Brown is also expected to announce further tax boosts for the lower-paid, with childless couples receiving up to £35 per week in government top-ups.

Despite the slowing economy, the Chancellor is expected to avoid hiking taxes in the next Budget in March.

But there are hints that he may use the pre-Budget report to launch a debate on whether taxes should rise in the longer term in order to fund a boost to public services.

The NHS review - which concludes that the desperately under-funded health service should continue to be paid for out of taxation - will pave the way for tax rises in the long-term.

Growth downgrade

The state of the economy is also at the forefront of Mr Brown's concerns.

The existing forecast of estimated growth is almost certainly to be revised down, following a worsening of the global economic slowdown in the wake of the 11 September attacks.

Some experts expect Mr Brown to reduce his predicted range to 1.5-2% from the existing 2.25-2.75%.

But the Chancellor's view on the Britain's longer-term economic health is likely to remain positive, with a wealth of recent economic data suggesting that the UK is performing better than its peers.

And British businesses are expected to get a helping hand as firms forge a survival path during these troubled times.

Helping industry

Capital gains tax, for example is likely to be overhauled in order to reduce the tax payable on shorter-term gains.

And a simplification of VAT rules will help small business cut back on red tape.

Gordon Brown will take centre stage on Tuesday

The business community is also calling for a tax credit on research and development (R&D) in order to maintain Britain's competitiveness in the long-term.

The Confederation of British Industry's Digby Jones points out that R&D and training are often the first victims of the slowdown, but desperately need to be maintained in order to keep attracting foreign investment to the UK.

Shadow chancellor Michael Howard also highlighted the need for improvement in this area, saying that the UK has slipped from ninth to 19th in the world competitiveness league.

"If British firms can't win the orders and create the jobs, we don't have the resources... for our public services, and we will all be very much worse off," Mr Howard told the BBC's Breakfast with Frost programme.

Disappointed consumers?

But consumers hoping for a pre-Christmas boost could be disappointed.

March's budget was characterised by pre-election crowd-pleasing measures such as lowering the duty on fuel and boosting paternity and maternity benefits.

But there are fears that the stamp duty on house prices may be increased this time round.

And while consumer groups are lobbying for reforms on inheritance tax and pension law, few big changes are expected.

Britons may have to consider themselves fortunate if they escape without a rise to the mandatory National Insurance (NI) contributions.

While an increase in NI payments was once expected, Mr Brown is now thought to have shied away from undermining consumer confidence and hurting High Street sales.