Analysis: Mr Brown's budget is a case of 'the economy sort of', writes Marc Coleman, Economics Editor.

Gordon Brown's tenth budget is less a case of "It's the economy, stupid" and more a case of "It's the economy, sort of."

Brown remains confident on the economy, even though critics of yesterday's budget - the Conservative opposition and the Confederation of British Industry - have drawn most of their material from its recent weakness. "The British economy is strong and strengthening," he proclaimed in yesterday's budget speech.

The Bank of England, which Brown made independent of government early in his tenure, showed an irksome ingratitude during 2004 by implementing a spate of rate hikes.

As well as having the desired effect in cooling house prices, these slowed growth in the UK economy to just 1.8 per cent last year, down from 3.2 per cent in 2004. This left the Chancellor facing into this year with weaker than expected revenue growth and rising unemployment. But apart from those two factors, the economic backdrop to the UK budget sounds familiar.

A growing inclination by British people to borrow money, often backed by housing equity, has made the UK economy overly dependant on consumption, analysts say.

Economic growth - and thereby tax revenue - is similarly overdependent on borrowing.

Soon both the UK economy and Gordon Brown will run out of fiscal road. But for the time being, and as in previous budgets, Brown has responded to growing spending pressures by raising exchequer borrowing.

Instead of the £34 billion (€49 billion) borrowing target expected for the coming financial year, Brown's exchequer borrowing will now reach £36 billion.

But despite this Brown can still boast about Britain's better budget balances; as a share of GDP, both his budget balances and total debt remain low by international standards.

"Net debt is now 47 per cent of national income in France, 47 per cent in America, in Germany it is 62 per cent, in Japan 83 per cent and in Italy over 100 per cent. But this year in Britain it is 37 per cent," he said yesterday.

And much of the increased spending announced yesterday is aimed at tackling long-term deficiencies in public infrastructure of the kind experienced here.

To please the business community, Brown has introduced a 30 per cent tax relief for venture capital investments, £100 million in new money for enterprise capital and the expansion of Research and Development tax credits. The Confederation of British Industry (CBI) welcomed these fiscal moves yesterday.

But it criticized the rate of growth in public spending and called for lower corporation tax. "It is vital that the Chancellor reins back on public sector expansion," CBI director general Digby Jones said yesterday.

In an effort to please homeowners he has raised the thresholds for stamp duty by £5,000.

Moreover, he has announced £1 billion to help new homeowners get their first step on the property ladder.