The Chancellor of the Exchequer today confirmed overnight reports that he is to postpone next year’s Government spending review until the summer of 2007.

The move was interpreted as a sign that Mr Brown is taking a firmer grip on public spending, or, according to the CBI, that it reflects "the mounting problems with the Government's finances".

In testimony to the Treasury Select Committee, Mr Brown maintained that his Golden Rule had not been broken: "We will meet the golden rule irrespective," he said.

The Golden Rule calls for a balanced budget, excluding investment, across the economic cycle. It only allows the government to borrow for the purpose of investment.

What has been re-defined, however, is when the economic cycle started or will end. Today's announcement of the change to the spending review dates may not help to clarify the position.

Mr Brown appears to believe now that the cycle started in 1997, shortly after Labour was elected, and that it has not ended. He said the Government’s second Comprehensive Spending Review would examine the investments and reforms initiated since the first Comprehensive Review in 1997.

Putting back the start of the cycle by two years allows Mr Brown to include the £9 billion surplus in Government spending achieved in this period.

Mr Brown said it was now up to the National Audit Office to decide exactly when the economic cycle started.

Ian McCafferty, chief economist at the employers' organisation, the CBI, said: "The Treasury announcement that the fiscal goalposts have been shifted reflects the mounting problems with the Government's finances.

"It is not at all clear why the Office for National Statistics now believes that the economic cycle started in 1997, rather than 1999. The change greatly improves the Government's chances of achieving the 'Golden Rule' for public sector borrowing in the current economic cycle.

"The announcement only serves to highlight the sharp contrast between monetary policy, which is well-understood and appears genuinely free of political involvement, and fiscal policy, where the Treasury is able to act as both judge and jury.

"By delaying the review, the Chancellor seems to be denying his Government the opportunity to re-examine the options for spending restraint in 2007-08. But without such restraint, further - potentially damaging - tax increases will be hard to avoid".

Howard Archer, the chief economist at Global Insight, said tweaking the start date of the economic cycle would give Mr Brown more breathing space to meet his self-imposed fiscal rules.

But he warned that the Chancellor would still be starting the next economic cycle from a weak position.

"Significant corrective action still seems inevitable in next year's budget, be it through tax increases, spending cutbacks or a combination of the two.

"A key question will be to what extent will the Chancellor risk tightening fiscal policy if the economy is still struggling to regain upward momentum?"

The decision is believed to have been agreed in consultation with the prime minister, Tony Blair, and will mean that the next setpiece allocation of public spending — to cover the three financial years from 2008-09 through to 2010-11 — is 2½ years away.

It is likely that Mr Brown will ask Whitehall departments to stick to existing public expenditure plans until the end of the 2007-08 financial year.

The move by the Chancellor to delay the normal three-year rolling timetable for the spending review will prompt widespread speculation in Whitehall over Mr Brown’s motivations.

One rationale is that Mr Brown believes he will be Prime Minister by the time of the delayed spending review and so will be able to exercise his preferences over government spending priorities.

There is also speculation that the cancellation of the planned spending review, which would have put the final third year of the Government’s existing spending plans into play, is motivated by a concern on the Chancellor’s part that increasing strains on the public finances could raise pressure for spending cuts.

Should Mr Brown believe that the Prime Minister’s preference would be for cuts in spending rather than tax increases, motivation for delaying the round would be to reduce the scope for Mr Blair to press for curbs on spending as an alternative to higher taxes.

Read Philip Webster, Times Political Editor, on the significance of the move here.

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