By Will Smale
Business reporter, BBC News
Is Mr Darling annoying the very people he needs most?
At at time when the UK's battered public finances have never more needed the help of City institutions, the chancellor's Budget will not have won him any prizes for good psychology.
Alistair Darling may not have reused Dennis Healey's famous quote of "tax the rich until the pips squeak", but the increase in the top rate of income tax to 50% is hardly going to please the square mile's power brokers.
Especially when he also wants them to buy some of the £220bn worth of new government bonds, or gilts, that Mr Darling also announced would be released this financial year to help fund the burgeoning public sector budget deficit.
The problem for the chancellor is that while increasing the tax burden of the richest members of society will no doubt raise a cheer among traditional Labour voters, the party's core support base is not in a habit of buying gilts when they do their weekly shop.
Instead it is the big banks, pension funds, insurance companies and investment firms that buy government bonds.
And putting to one side the likely new animosity towards Labour over higher taxation, the government has already had some difficulty in selling the big increase in gilts it has so far issued to help bolster the public finances.
Last month, the government was forced to admit that it had failed to sell all its gilts in an auction for the first time since 2002. It had wanted to sell £1.75bn of 40-year bonds, but investors only bid for £1.63bn.
With the planned £220bn worth of new gilts to be issued this financial year being 50% more than the £146bn in 2008-09, the government has already admitted that further failed auctions "are a possibility".
The £220bn of new bonds will be issued over the next 12 months
"We're confident we'll be able to sell this [the £220bn worth of bonds], but asking the market to price all of this in is a big ask," says Robert Stheeman, chief executive of the UK Debt Management Office (DMO), the government office that issues the gilts.
"Uncovered auctions are a possibility but I don't think it will happen frequently," he says.
Bond industry expert, Steve Major, head of fixed income at HSBC, told the BBC that it was a simple matter of supply and demand.
"Government bonds aren't complicated, they are the same as selling fruit and vegetables," he says.
"And if there is a glut of them in the marketplace, it is going to knock the price."
But while the price of vegetables go down if there are too many for sale, if there are more bonds up for auction than the market typically wants, the government will have to increase the yield, or interest, paid on them to attract buyers.
This would therefore make the bonds more expensive for the government, doing little to help reduce the public debt, something Mr Major describes as a "vicious circle".
"My concern is that the bond market will be over supplied, that it will suffer indigestion, and that the government will have to raise the yields to clear the big increase in the amount of gilts being issued," he says.
"I think the government will sell them all, but it is going to be costly."
Thankfully for the government, it appears to have two saving graces - the Bank of England is continuing to Hoover up gilts; and demand from overseas investors also remains strong, thanks to the reduced value of the pound.
The Bank of England is continuing to buy up billions of government bonds as part of its policy of helping the commercial lenders through increasing the amount of money in circulation, a policy known as quantitative easing.
Mr Major estimates that the Bank may buy as much as £150bn worth of the £220bn of new bonds, but that would still leave a surplus of £70bn in a marketplace that may already be oversupplied.
CBI director general Richard Lambert agrees that the increase in the number of gilts being issued may be a cause for concern.
"The government is running too much of a risk with the willingness of investors to finance UK debt," he says.
Mr Lambert says the government should instead take "a serious look" at reducing both public services and public sector pay.
"This is the only realistic way of getting back to fiscal balance without having to resort to further hefty tax rises," he says.
However, Mr Stheeman of the DMO insisted that overseas demand for UK government bonds remains strong.
"Weakness in sterling has provided opportunities for overseas investors," he says.
"I see no reason to think that overseas buying will come to a sudden abrupt end."
Yet with concerns continuing that the chancellor's projections for eventual UK economic recovery may be over-optimistic, Mr Major said this was another factor putting investors off buying more bonds.
"If you are buying a long-term bond of, say, 10 or more years, you need to be comfortable about a government's economic projections," he says.
Returning to the issue of higher taxation for high earners, City law firm Berwin Leighton Paisner (BLP) has warned that it could lead to an exodus overseas.
"This Budget is hardly a recipe for motivating increasingly mobile taxpayers and individuals to greater economic endeavour and reducing the rush of UK companies migrating," says Michael Wistow, head of tax at BLP.
The pips may not yet been squeaking, but they seem far from happy.