He said the budget, Labour’s last chance to set out its plans for the economic recovery, before an expected 6 May election, will be “a budget for the times in which we live.”
He said: “I don’t think anyone’s expecting some sort of Christmas tree of a budget. They’re not going to get anything like that.”
His comments followed claims by chief secretary to the Treasury Liam Byrne that tax raises are not key to cutting the deficit. In an unexpected intervention, he ruled out tax increases including upping the rate of VAT.
The government says the £178bn deficit will be halved by cutting spending and raising £19bn from previously announced tax hikes, including increasing the top rate of income tax to 50 per cent and national insurance by 0.5 per cent.
Meanwhile, Europe’s second largest bank UniCredit said Britain is at serious risk of a of a bond market and sterling crisis. It said Britain’s AAA-rating is in jeopardy as its tax structure makes it difficult to raise revenue quickly.