Darling faces the music after a decade of excess

He may have moved next door to Number 10 Downing Street last summer but the legacy of his brooding presence in 10 years as Chancellor does not shift so easily.

The favourite targets for taxation, the amount and direction of government spending, the unhealthy and excessive dependence on borrowing have all been bequeathed by Brown to his successor and massively limit Darling's freedom of action. Even the cut to 20p of the standard rate of income tax, which will be the most enticing of Darling's announcements on Wednesday, is something we know is coming. Brown promised it a year ago.

Indeed, in true Brown fashion, it is one of those tax cuts which mean we will pay more. The simultaneous abolition of the starter rate of 10p means that on balance the Exchequer will end up taking more money from us, not less. Even if some of us feel a little better off, the reality is that the majority will actually be paying more.

The mischievous also point out that if this is not Darling's first Budget, perhaps he will never have one. No Chancellor in living memory has so successfully alienated so many key constituencies before he had even properly got his feet under the table.

So the upcoming Budget speech is also a huge personal test for him - and politics being what it is, there is always the possibility that a virtuoso performance at the despatch box on Wednesday could rekindle the flame of belief in his competence, so his career rises Phoenix-like from the ashes of the last six months.

It is possible, but it is probably not the way to bet. An impromptu vote was held last week at a City lunch of 24 businessmen and City figures on whether Darling would still be Chancellor in 12 months' time. Not one hand went up in support. It underlines how totally his ill-thought-out proposals on capital gains tax and the revision of the rules on non dom taxation have shattered the consensus.

Until last autumn, business thought it knew where Labour was coming from even if it did not always like it, but not any more. By announcing such farreaching changes with no prior warning, Darling sacrificed that most precious commodity of trust. Having broken the spell, nothing he does can get it back, and even a successor with clean hands will have a problem.

It is a double tragedy for him and for the country because with the probable onset of hard times as the worldwide economic slowdown gathers pace, voters like to draw what comfort they can from the knowledge that the stewardship of the nation's finances is in good hands. They like a bit of leadership - other than down the garden path. Darling does not look the man to seize the moment.

He is reaping what his predecessor has sown in other ways. The CBI today publishes a meticulously researched and totally damning report on Britain's company tax system, which it says is seriously hampering our international competitiveness and now requires fundamental reform. But in their hearts they know the Treasury will not be listening.

The reputation of that Ministry is also at an all-time low, partly because Brown politicised it so that many of the most talented left, partly because half its staff have served fewer than five years or less. There is no depth of experience, no safe pair of hands to stand behind a minister who fumbles.

This would be bad enough in good times, let alone what we now face. Darling will no doubt blame the Americans for exporting a global financial crisis, and with good reason - but he should not try to mask the fact that some of our problems are of our own making.

One often thought, listening to Brown's rhetoric on Budget day, that he inhabited a parallel universe, a world where the economy gleamed with low inflation, low interest rates, low unemployment and steady, uninterrupted growth. That was Brown's world and what he never told us, of course, was how it was made possible by the boom in house prices which allowed people to spend more than they earned.

Meanwhile, the rest of us live in an economy where a growing number of children leave school barely able to read and write, where the infrastructure and public transport shames a modern economy, where the balance of payments is worse than it has been for decades, where the Stalinist imposition of targets on the state sector has destroyed any form of public service ethos, and where the national accounts are only kept in rough balance by the regular sale of our best companies to overseas buyers.

These woes are not of the Americans' making, but with the froth being blown off the nation's prosperity, and with people now so saturated with debt that they cannot take on any more, these shortcomings will become much harder for Labour to shrug off.

Darling's core problem is that the national accounts are in a mess and he can't do anything about it because raising taxes now risks plunging the economy even deeper into the mire. Growth is forecast to slow to a level which could see unemployment creep up.

Government has been running up debts at an unprecedented rate for peacetime, because though Government spending accounts for 45 per cent of UK economic activity, taxation covers only 41 per cent. The balance has to be borrowed but that could force up interest rates. The finances will get worse because economic slowdown will mean less from capital gains tax, company profits tax, stamp duty on house sales and even VAT as shoppers lose their appetites. If house prices start to fall sharply he will be in even deeper trouble.

Growth, government borrowing and tax are the three things a Chancellor has to worry about, and with all three going the wrong way no amount of despatch box bravado or Budget Day theatricals can properly conceal what lies beneath. That is why the most likely verdict on this speech, after the dust settles and the political tinkering has been dismissed for what it is, is that we have passed another milestone in Labour's slow decline.