Britain's budget conundrum:

Reuters' Treasury Editor MIke Peacock gives us his take on Osborne's big speech:

Budget statements from Britain and Ireland take top billing today with UK finance minister George Osborne cutting an increasingly lonely figure in policymaking circles as an advocate of cutting your way back to growth. While the economic policy room for manoeuvre is limited this is a huge political moment. With elections due in 2015, a feeling of recovery must be entrenched in the public’s mind well beforehand if the Conservatives are to entertain hopes of governing alone next time. So measures now and in the 2013 budget in the spring are the best opportunity to change the game.

Osborne has already said he is sticking to his austerity plan – and having made it the government’s central policy plank he has little choice although the opposition Labour party have staked out the opposite ground and hopes to capitalise. Even so, Osborne is likely to have to admit that he will miss his debt-cutting targets so that the pain will have to last for longer, well into the latter part of this decade.

As the euro zone has shown, without growth cutting debt is nigh on impossible. Osborne came into government in 2010 saying the austerity drive would be complete by the time of the 2015 election. He is expected to say today that it will stretch to 2018. Labour’s significant opinion poll lead is widely seen as “soft” but it might not be for long.

Further spending cuts are inevitable – with the welfare bill under close scrutiny — but Osborne surely has to come up with something that looks like a parallel growth strategy. A pre-announcement of 5 billion pounds for schools, science and transport projects nods in that direction but that will be paid for by equivalent cuts in government departmental spending – so there will be no net stimulus.

Under a recent sleight of hand, the Treasury has grabbed 35 billion pounds from the Bank of England’s profits from its bond-buying, money-printing programme. But independent scrutineers say this shouldn’t be used to knock a load of public debt off the balance sheet since it will have to be handed back at some point in the future. Doubtless it will be used in that way!

For the markets, the debt management agency’s statement on likely gilt issuance next year will be a key. A poll of market makers earlier this week showed the annual total may drop by around six billion pounds to 158 billion. But there remains a very big question mark over when the bond market might reassess Britain’s record low borrowing costs, particularly if a ratings downgrade is looming.

Prime Minister's Questions is just getting started. David Cameron congratulates the Duke and Duchess of Cambridge on the announcement that she is pregnant.

The first is benefit cuts. The Chancellor will announce some details of how he seeks to reach his target of £10bn further cuts in the benefit bill. The second is more money, taken from Departmental underspends, for Apprenticeships. The challenge here is to maintain quality rather than just boosting quantity. The third is the Government's response to the Heseltine Review where Local Authorities will be hoping for greater control over the skills budget.

The PM and leader of the opposition Ed Miliband are having a back and forth over whether NHS spending has been cut. Nobody seems sure.

The Labour leaders says the Conservative 2010 manifesto claimed health spending would increase every year, something he says hasn't happened. Cameron says NHS spending was £104.2bn in 2010, and £104.3bn in 2011.

Labour MP Margaret Hodge, chair of the Commons public accounts committee, says 'naming and shaming' companies which do not pay their fare share of tax is effective as Starbucks has 'caved' and reached a deal on its corporation tax. The PM says he agrees that public pressure works.

Today's fall inthe service sector PMI data won't help out the Chancellor as it just makes the original OBR growth forecast for 2012 of 0.9% seem even less relaistic....

That's the end of PMQs, and here comes the Chancellor.

"It's taking time, but the British economy is healing," says Osborne, sparking guffaws from the opposition benches.

Britain is on the right track - says Osborne - he won't change track now...

Low interest rates, strong demand for gilts, all good news for an indebted government, not so good for savers and pension funds.

The OBR forecasts growth for 2012 to fall 0.1% this year - a hefty 1% downward revision from their previous forecast.

Does anyone else see one huge BUT....coming?

Osborne: OBR forecasts 2013 GDP growth of 1.2%, 2% in 2014

high UK employment is THE big mystery

The Chancellor is talking about strong employment growth in the UK, however this isn't helping young people as youth unemployment remains at unacceptable and socially damaging levels.

Royal Mail privatisation? So is it official now?

this is the big ripoff - transferring profit from gilt purchases to the Treasury

Deficit forecast to fall this year - yes, but not by as much as forecast, I imagine...

OBR says UK on course to eliminate struictural deficit in 5-years time, we have more than a 50% chance of doing so.,..