Chancellor Gordon Brown has revised down his economic growth forecast for the second time in half a year.
As a result, tax revenues will be well below expectations, forcing Mr Brown to raise his targets for government borrowing yet again.
Blaming the global economic slowdown and uncertainties because of the war in Iraq, he now predicts the UK economy will grow by between 2% and 2.5% this year.
This is more in line with the forecasts of most economists and City analysts, but half a percentage point below the forecast in November's pre-Budget report, and a full percentage point below the figure given in the Budget in 2002.
Mr Brown was quick to point out that this would leave UK growth still double the rate in the eurozone and Japan, and about the same level as the United States.
However, as a result of poor economic growth, tax revenues will be lower than hoped for and the government's need for borrowed money, meanwhile, will shoot up to £27bn this year and £24bn next year.
Six months ago, Mr Brown had said he would have to borrow much less - £24.5bn in 2003 and £19bn in 2004.
But Mr Brown says that this will keep UK debt levels well below his ceiling of 40% of gross domestic product - at between 32.2% and 33.8% during the next five years.
Postponing tax revenues
Until last November, the chancellor and his Treasury officials had always managed to meet their economic targets comfortably.
But the good run was broken in the pre-Budget report half a year ago, when Mr Brown was forced to revise the growth forecast for 2002 from 2-2.5% down to 1.6%, and this year's growth rate from 3-3.5% down to 2.5-3%
Back then, the chancellor managed to make his numbers add up by boosting his growth forecast for 2004 from 2.5-3% to 3-3.5%.
He effectively lowered tax revenue expectations for this year, but said the shortfall would be made up by higher tax income in the following years.
Most independent experts believe that Mr Brown's forecasts are too optimistic. They say that the coming three years will see growth rates of about 2.4% at best.
But Mr Brown insists that the economy will steam ahead at a rate of between 3% and 3.5% during 2004 and 2005.
This contrasts with a rate of just 1.8% in 2002, and assumes a sharp worldwide recovery.
BBC economics editor Evan Davis described Mr Brown's descriptions as a "huge gamble".
By postponing tax revenues by a few years, he might create even bigger problems for himself should he get his numbers wrong.
The Chancellor, though, would point to the overall macroeconomic picture - with unemployment at a record low, inflation at a thirty year low, and interest rates at a forty year low - which he believes is enough to set the UK economy on a growth course.