What's inside Mr brown's box?

For the time being he is likely to turn to borrowing, with perhaps a number of small tax increases. However, a sting in the tail could follow next year with more significant tax rises.

Speculation that the Budget was deferred to a date that may be after war in Iraq means the global economic position will play a pivotal role in the Chancellor's policy decisions about the UK economy an economy which even the Chancellor has accepted is undershooting his forecasts.

The £7 billion deficit identified at the time of the Pre-Budget Report in November has continued to grow, opening up a black hole in the public finances.

But Solomon Hare believes Brown will not risk destabilising an already fragile economy by increasing the tax burden on business. David Mouncey, tax partner at Solomon Hare, said: "He will more than likely claim that current spending levels are affordable and then bet on an upturn in the economy over the next few years to bail him out of trouble.

"Or will he accept that he's got his sums wrong and admit that continued borrowing to fund the deficit is not the solution?"

In the International Monetary Fund's (IMF) view, Gordon Brown will need to put up taxes or cut public spending to the tune of £13 billion per year.

Mr Mouncey said: "The Chancellor is stuck between a rock and a hard place. Tax revenue is lower than expected because the economy has not performed as well as the Chancellor had hoped.

"This means he is looking at a significant shortfall in funding public spending plans for the NHS, schools and transport.

"But with the Government totally committed to these public sector improvements he's not really in a position to start making cuts. So that leaves two realistic options. He either raises taxes or borrows more."

According to the Solomon Hare tax team, raising taxes would be difficult politically since he has imposed a number of personal and business tax increases in recent budgets. But according to Chris Hanson, a partner at Solomon Hare's Chippenham office, it also makes little sense to place an even greater burden on business when ultimately Mr Brown needs to improve productivity and competitiveness in order to fuel growth in the economy which is by far the better way to pay for improved public services.

Mr Hanson said: "The Chancellor will still be stung by criticism from business after his last Budget, particularly with regard to the NI increases labelled by many at the time as a 'tax on employment'. It would be a risky strategy for the Chancellor to announce further significant tax increases, but it appears his hands are tied, and so some tax increases are inevitable."

So what specific aspects of the Budget is the Chancellor likely to address?

National Insurance Contrib-utions: The Chancellor could take an innovative approach to NI. There is a view that with the increases in NI rates, and a growing trend for payments from companies to be in the form of dividends, NI avoidance could become a growing trend. A possible solution would be that a statutory minimum level of NI could be introduced for people above a certain income level.

Stamp Duty: A rise in stamp duty must be a tempting prospect for the Chancellor since both the commercial and residential property markets remain strong. Demand will continue as long as there is a perceived lack of suitable property and with low interest rates, Solomon Hare believes values will either continue to rise, albeit more slowly than last year, or begin to stabilise.

Combating Tax Avoidance: The Chancellor will probably look to increasing the tax take from the Inland Revenue and Customs & Excise.

In particular, he will want them to pay greater attention to detail when reviewing planning schemes aimed at avoiding tax with a special emphasis likely to be placed on to multinationals and VAT in general.

Insurance Levy: Recent tax revenues have not all been bad news for the Chancellor. The significant increases in insurance premiums following September 11 means the associated tax has produced a windfall to the exchequer. The insurance industry has been lobbying to have the level reduced.

Capital Gains Tax: Kevin Slevin, specialist in capital gains tax at Solomon Hare, will not be the only one disappointed should there be no significant changes to the capital gains tax system. He and many other CG experts have been having regular discussions with the Inland Revenue for changes to be made which will help simplify what is an overly-complicated and unwieldy tax system.

So in summary, deferring the Budget could turn out to be the Chancellor's best move.

David Mouncey said: "By deferring the Budget the Chancellor may be gambling that with a quick resolution to the threat of war, much of the uncertainty which has been hanging over business will be removed a factor boosted by the possibility of lower oil prices and higher share prices.

"In short, the Chancellor can present a more favourable economic outlook."

Overall, it seems likely business can expect the Budget to be a non-event, with no headline grabbing increases and little solid to say about the growth of the economy. Ironically, the biggest impact on business around budget time is likely to be a change introduced at last year's Budget the one per cent increase on NICs.

Solomon Hare pension specialist Martyn Cross concluded: "Even here the canny business can minimise the impact by paying any wage rises into the pension scheme instead, which is not subject to NI. The employee then pays less into the pension and keeps more in the pay packet."