What is the Pre-Budget Report?

Every year the Chancellor reports to Parliament on the state of the economy. He also gives advance notice on any changes that may be made to tax and benefits in the Budget statement in March.

The Government sees the Pre-Budget Report, or PBR, as a testing ground to float policy ideas, consult businesses and encourage feedback. Previous reports have announced new policies such as the minimum income guarantee for pensioners, concessions on fuel duties, and the 10p starting rate of income tax.

Why is it important?

With a general election expected next year, today's PBR gives an indication of how government fiscal policy is shaping up and what future direction it might take. These will be finalised in the March 2005 Budget and the July 2005 spending review. Gordon Brown will not want to lose his reputation for prudence, but he could offer pre-election sweeteners today.

What are the key topics?

This year's report will include and update on the Barker Report investigation into the housing market.

Mr Brown will also unveil a ten-year childcare strategy and set out his vision to make the next ten years "a British decade".

The huge budget surpluses enjoyed by the Government have disappeared and been replaced by rising deficits. This has raised questions on whether the Chancellor will be able to meet his "golden rule", which stipulates that the Government can only borrow to invest over the economic cycle. Many experts believe that Mr Brown will have to cut spending or increase taxes if Labour win the next election. The Government's cash requirement is now projected at £44 billion, compared to the Chancellor's forecast of £27 billion in the April Budget.

Mr Brown is also tipped to scrap the fuel tax rise announced last spring and to boost the fight against corporate tax dodging. Other measures which might get a mention include inheritance tax reform and a revision of Stamp Duty thresholds.

Is the PBR the same as the old Autumn statement?

Sort of. The last Conservative chancellor Kenneth Clarke abolished the autumn statements, which announced advance spending plans, because he wanted to combine the Budget and autumn statements into a single presentation. Mr Brown introduced the PBR, which is less about public spending and more focused on tax policy strategy.

Explore Economics

• Pre-Budget Report 2009

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