The net effect of Mr Osborne's various tax-raising and tax-cutting changes will be to raise revenue by 0.4% of GDP by the end of the parliament.

ECONOMIST: Britain's emergency budget

He said they were unsure how they would manage if the effect of Chancellor George Osborne's Budget was to introduce cuts in this financial year.

BBC: Museums in Wales 'to fight for free entry'

In his Budget speech, Chancellor George Osborne said the increase would come into effect from 2015.

BBC: Business

To date, Mr Osborne has used his political skills to good effect.

ECONOMIST: Bagehot

Although the UK is not a member of the single currency, 40% of its trade is with the eurozone and Mr Osborne said there were signs the continuing uncertainty was having a direct effect on the UK economy - which has seen sluggish growth.

BBC: Eurozone crisis: Osborne warns of impact on UK jobs

Osborne and Balls would also agree that weak growth has had a major effect on government borrowing.

BBC: Osborne, Balls and the OECD: Where they agree

The new system had been due to come into effect in April 2017, but in last month's Budget Chancellor George Osborne brought the date forward to April 2016.

BBC: State pension reform 'needs better explanation'

In response, Mr Osborne would point instead to the difficult domestic legacy of the financial crisis, and the chilling effect on investment and bank lending from the crisis in the eurozone.

BBC: UK GDP: A nasty surprise and a puzzle

Mr Osborne's advisers would say any increase in investment that is large enough to have a material effect on the recovery would set off alarm bells in the markets, even if the formal deficit plan had not been undermined.

BBC: Vince Cable's plan B: a "matter of judgement"