The party's over and the day of reckoning dawns

With the Federal Reserve yesterday pumping an emergency $200 billion into the US banking system and credit crunch expected to impact on the UK in the coming months, no one is now arguing that Britain can remain exempt from the rapids of turbulent global finance. The old Brownite claims that the British economy was in such splendid shape that it was immune from external shocks are consigned to archive footage.

Unlike his boss next door, Alistair Darling is not the boasting type - and there is little to boast about even if he were. The economic story is that a large hole in the public finances which opened under Gordon Brown's chancellorship has to be paid for under Gordon Brown's premiership, with an extra £5 billion needing to be raised in taxes to offset a black hole as soon as the worst of the economic news is over. So after the pain, more pain is the inescapable message of this year's reckoning.

Meanwhile the politics of it all are simple and tough. This is the penultimate Budget before the likely election being pencilled in for mid to late next year. As such, it has to provide the foundations for Mr Brown's pitch to remain in No 10 - that he is the more reliable and solid choice of leader for the country in straitened times.

This claim has been viciously battered in recent months. The formal launchpad for the chancellorship of Mr Darling, this Budget will be most closely watched for his ability or otherwise to wriggle out of the mistakes which have overshadowed his brief tenure at the Treasury. "Think of it as one of those events that exceeds low expectations," says one senior ally.

Mr Darling still dwells in the afterlife of Chancellor Brown - a status which must tax a man even of his legendary patience. He has been knocked off course by what one Cabinet minister calls "one effing disaster after the other": Northern Rock, a mishandled election tease which prompted a rushed pre-Budget report and clod-hopping attempt to impose a flat rate on Capital Gains Tax, followed by a fierce and unremitting backlash.

The final straw was chasing a flawed Tory initiative on non-doms for a nonexistent election, and managing to add even more flaws in the process. That has landed Mr Darling with a Jack Bauer style rescue job: defusing first the proposal that non-doms should find their other tax affairs pried into by the authorities and now, just in time for the Budget, a deal to ensure that any levy paid in the UK can be reclaimed in the US by American non-doms.

Labour can rightly say that the Shadow chancellor George Osborne's plan looks very wild indeed if nondoms leave the capital and the Tories need to finance a rather expensive inheritance tax cut from their ruse. But a government which has announced with some fanfare that it intends to run for a fourth term on the grounds of steady competence has just made a mess of two key bits of Treasury business and squandered City confidence into the bargain. "These are difficult areas to handle well," says one former senior member of the old Gordon Treasury team, for which read: "We know we didn't."

More important, though, is the return of steadiness and reliability which has been so lacking. A minister deemed a "safe pair of hands", Mr Darling needs to show he has some flair and a touch of humour (which he has privately but conceals to his detriment in public) - allied to a firmer grasp of the impact of his announcements.

Atonement is one thing. Retaining self-belief - a vital asset in Number 11 - is another. This is, after all, one of the set-piece events which will establish the road to the election manifesto.

So there is money to help failing schools tethered to Mr Brown's belated enthusiasm for radical education reform - and a boost for his protégé Education Secretary Ed Balls. Alcohol has come off badly, too, as the Government finally got serious about the harm of a national drink problem. (Tap water only at the dispatch box.)

"Green" taxes on large cars are offset by some mercy in postponing the fuel duty increase heralded in the last Budget until October. Remember that Mr Darling is a Treasury veteran of the fuel duty protests which stunned the Government; he is not about to launch another round of pain at the pump on worried consumers clutching their overburdened credit cards.

Mr Darling came to the job promising simpler and fairer taxes. In truth, he has little at his disposal to be fairer or simpler with. He has a lawyer's mind and the accompanying fondness for closing loopholes.

What he cannot do, after the messy handling of the non-dom tax and taper relief, is pursue corrections that look targeted for purely political reasons. It is no accident, as the Leninists used to say, that John Hutton was out and about telling high earners how much the Government loves them a day before the Budget.

There are some classic Labour themes, such as a renewed commitment to end child poverty - though the reality lags well behind the targets.

But what the Opposition would most like now would be a weakened government to make its life easier with a tax raid that hits middle Britain. Mr Brown got away with that for several years with "stealth taxes". The mood is very different and more watchful now.

It is also a game of two halves in a way that the Brown-era Budgets were not. Mr Osborne, has had an exhilarating period - if marred by an overcooked reaction to the Northern Rock nationalisation. But he considers Mr Darling a beatable opponent and is no longer cowed by the Brown record.

Invective is only half the equation for the Opposition, however. The Cameron Tories cannot shout their way to victory and Mr Osborne needs to grab his platform today to sound like a viable alternative as well as a heated critic.

Mr Darling, I'm told, heaved a sigh of relief when the bound version of his inaugural Budget was handed to him, anxious to get on with a performance that could begin his rehabilitation or prove the beginning of the end. But he remains a Chancellor on trial, which is not a comfortable place to be as the economists' angry red graphs tell us that the party is well and truly over.