Will Brown let Darling tell us that he is going to hike the VAT rate to pay for the stimulus package?

As we learnt during the banking crisis, what Robert Peston predicts tends to become reality shortly afterwards. So, his informed speculation on what is in the PBR is well worth reading.

This passage is particularly interesting and appears to be the latest shot in the briefing wars, which has reached up to cabinet level, around the Brown-Darling fight over whether or not Labour should explain how it tax cuts and increased spending will be paid for:

“But he [Darling] will also announce deferred tax rises and deferred cuts in public spending – to kick in when the economy has recovered a bit. When would that be? Maybe 2010, maybe 2011.

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If he fails to announce such debt-reduction measures, there could be very strong downward pressure on sterling and a corresponding damaging rise in the cost for the government of borrowing.