Leader: Compromise at the centre of George Osborne’s Budget strategy

Indeed, it is all the more so considering that the Chancellor is barely at the end of the beginning of his deficit reduction programme, let alone the beginning of the end. The reasons for such speculation, however, are not hard to find. Political pressure for easing the hit on household budgets is great. But there is also a growing economic argument. While financial markets in America, Japan and continental Europe have moved strongly ahead this week on evidence of an economic pick-up, prospects for the UK remain anaemic.

Last November, the independent Office for Budget Responsibility reduced its forecast for economic growth this year to just 0.7 per cent, with a modest improvement to 2.1 per cent pencilled in for 2013.

The Chancellor’s fiscal reduction targets in the years ahead are now in danger of being missed because economic growth – and with it higher revenues flowing into the Treasury – are set to fall well short of the levels required. Unemployment is continuing to rise and the jobless rate among 18 to 24 year-olds is of particular concern. Fortunately, a bigger-than-forecast reduction in the budget deficit for the financial year just ending gives Mr Osborne some small room for manoeuvre. It by no means enables a blaster tax-cutting Budget. But it gives him scope for a positive step towards help for lower income households. This has the double benefit in that the money is likely to be quickly spent, thus providing the boost to demand that business and the economy overall sorely needs.

The latest intelligence suggests a deal may be in the offing. Mr Osborne could announce a significant rise in the threshhold at which income tax is payable towards £10,000 – the favoured Liberal Democrat benchmark. This would hand low to middle earners a £505-a-year tax break over the next two years.

It is, however, a costly measure. A full leap to £10,000 would be likely to cost as much as £11 billion. More likely on Wednesday is the announcement of a step to a threshold of around £9,000 with a pledge to complete the leap to £10,000 in the following financial year, rather than 2015 as currently planned.

As a quid pro quo for this, the Chancellor’s coalition partners may give support to the scrapping of the 50p upper tax rate for those earning £150,000 or more. Whether this rate has raised any significant extra revenue is a matter for dispute. Tory backbenchers have argued that wealthy people have moved abroad to avoid it.

All this would leave Mr Osborne with extra money to find, whether in the form of a tax on properties valued at £2 million or more – the mansion tax – or further restrictions on tax relief on pension contributions for higher rate taxpayers. This, however, runs the risk of discouraging pension saving.

However, under the constraint of producing a balanced budget, there has to be pain for the gain.

The Forth is the Rubicon of its time

Given the appalling record of infrastructure projects in Scotland in the last decade or so, it seems too good to be true but Transport Scotland has confidently predicted the £1.6 billion new Forth bridge could be finished a year early and, wait for it, on budget.

It is, of course, early days for this massive project and the government quango charged with its implementation did attach important caveats. They will finish ahead of schedule if they are not hit by construction problems, delays in delivering materials and bad weather.

Given the enormous size of this civil engineering effort and the logistics involved, including bringing component parts from as far away as China – not to mention the unpredictable Scottish weather – it might be wise to treat such confidence with a degree of caution.

However, if the consortium building this crossing is right in terms of the timetable that can only be welcome and, after the scandals over delay and cost over-runs in projects like the ill-fated Scottish Parliament, it could become a model for future projects.

What remains in question, though, is the apparent necessity for haste, something we have questioned in these columns before.

As we reported last month, new checks on its main cables are expected to show the threat to the original Forth road bridge from corrosion is receding.

We are still concerned the new crossing will suck up all of the Scottish Government’s capital spending at the expense of other projects but if we are now so far down this road (bridge) taxpayers at least will benefit if it is on time and on budget.