Brown's orbit around this dismal world

MR SPOCK had one important duty to perform. Whenever The Enterprise approached a new planet, he would peer into a viewing device and reel off facts and figures about the sphere in question, usually quite dismal ones.

No intelligent life forms, little oxygen, poor vegetation and so forth.

Our own Chancellor was in Spock mode on Tuesday as, in dolorous tones, he summarised the earthlings' economic woes: 'America is in recession. Japan is in recession, as are Singapore, Taiwan and Hong Kong. The euro area is slowing rapidly.'

How fortunate, then, that Britain orbits this stricken planet from a safe distance. Except it doesn't - although from the tone of the pre-Budget report one could be forgiven for thinking it did.

With the perfunctory acknowledgement that 'no one country can insulate its economy from such a synchronised slowdown', Brown proceeded to suggest that this was precisely what he intended to do. He congratulated the Bank of England on cutting interest rates. He congratulated himself on the fact that his huge public spending boost is coming 'at the right time in the economic cycle'. Together, these awesomely brilliant courses of action would 'reinforce stability and growth'.

Having thus declared independence from earth, Brown, unsurprisingly, came up with growth projections that appear heroically optimistic.

Back in March, the Treasury was predicting growth of 2.5% this year. On Tuesday - a whole world crisis later - that figure was cut by a mere 0.25% to 2.25%. And next year? Much the same, really. Pre-crisis, the Treasury was looking for 2.5%, and by Tuesday for 2.25%.

By 2003, the party is really swinging, thanks to all those interest rate cuts. Growth had been forecast at 2.5% in March but is now, apparently, going to run at 3%.

Contrast this with the City's own estimates. Down in the Square Mile growth this year is expected to drop below 2%, and to remain between 1.75% and 2% in 2002. Of course, the City's record in forecasting is no better than the Treasury's, but this does put into perspective the glibly touted idea that the 'Treasury view' is relentlessly pessimistic.

And an awful lot is hanging on those growth forecasts. Should they be as seriously out as the City seems to believe, then the already dramatic changes to the Government's spending profile will be greatly amplified. Lower tax receipts, particularly from Corporation Tax, will add £25 billion to public sector net borrowing between 2001-2002 and 2005-2006, even assuming the forecasts prove correct. Should they not, then a rerun of the rapid deterioration in the public finances seen in 1989/90 looms uncomfortably closer.

Gerard Lyons, economist at Standard Chartered, said: 'There are high risks.' And not only on the growth side. Even should Britain sail through the world downturn as planned, Lyons warned, it will emerge with an enlarged public sector and a shrunken capacity to produce tradable goods, particularly manufactured products. 'The recession in the Far East, and China's admission to the World Trade Organisation, means very stiff price competition for British factories. There is a nasty shock in store.'

But while price deflation hits Britain's tradable goods sector, the burgeoning public sector will generate its own, higher, inflation rate. Richard Jeffrey, economist at ING Barings, said: 'Prices of goods and services consumed by central government rose 4.5% in the year to the third quarter. Prices of products purchased by private households rose only 1.5%.'

The net effect will be a weaker economy.

Of course, the Treasury's growth forecasts could be too low, rather than too high. Sad to say, such an outcome would carry huge risks of its own. Ian Stewart, economist at Merrill Lynch, noted: 'We estimate that next year's planned increase in public spending is likely to be the fastest in any industrialised country. The plans involve the fastest growth in general Government consumption in 25 years - since the 'Barber boom' of the early Seventies.'

Mention of former Tory Chancellor Anthony Barber should send a chill down Treasury spines, bringing back awful memories of what happened the last time the ' pessimistic' mandarins presided over a huge increase in public spending regardless of what foreigners were getting up to.

Indeed, when you add the furiously pro-European Prime Minister to the free-spending Chancellor and put them against an impossible-to-read world economic situation, the echoes of 1971/72 are unmistakable.

Brown's bullish performance on Tuesday gave the impression of plenty of manoeuvring room in his route-map.

In fact, for everything to work out, the British (and world) economy will have to follow a fairly narrowly drawn set of co-ordinates. If it doesn't, then navigating a spaceship will be a doddle in comparison to the task ahead.