It is possible that the Chancellor's sums will add up. But is it likely?

Miss Prudence has become Dr Pangloss. If the Chancellor is correct, it is all going to be all right. Britain will continue to outperform the eurozone and Japan and will match the United States for its growth.

Miss Prudence has become Dr Pangloss. If the Chancellor is correct, it is all going to be all right. Britain will continue to outperform the eurozone and Japan and will match the United States for its growth. Government borrowing will naturally rise but will still be lower than that of the rest of the developed world. Unemployment will stay low, enterprise will flourish and the Government will have the funds to continue to reduce inequality and invest in public services. Britain is the developed world's recession-free zone.

If this sketch of Gordon Brown's vision were to prove accurate, it would be a huge achievement. The duffer of the world economy through the 1950s, 1960s and 1970s has become the star. But it has only been the star through the boom parts of the cycle. If it were to sustain a better performance through the downswing, the achievement would be all the greater.

But for the Chancellor's sums to add up, the country has to keep out-performing. If we don't get the growth – and remember, that depends not just on us but on the growth of our markets abroad – then the numbers would look much less attractive. We would be into spending cuts and/or tax increases, both of which would surely do further damage to growth.

Start with the growth forecast. To achieve 1.8 per cent last year was impressive in the context of near-zero growth in Germany, but it was half a point lower than forecast a year ago. This year it is forecast to be 2 to 2.5 per cent, fine if we get it, but many private-sector forecasters expect less than 2 per cent. Then 3 per cent plus beyond that? Take advantage of the world recovery? It is possible, but whether it is realistic is another matter.

The Government's borrowing numbers are based on these growth forecasts. As they stand, they are reasonably comfortable. Indeed, the financial markets, which have to find the money to bridge the gap, would find a slightly larger deficit acceptable. Any borrowing number of less than 3 per cent of GDP (about £33bn) would be fine, for that would still be lower than that of most other developed nations. Our credit is good.

But there are two threats. One is that the growth numbers will not be met. If the next five years are to be a period of slow growth globally, which many people fear, there will be a problem.

The other is that even if such growth were achieved, revenues will still fall short. That seems to have been happening during the past few months. Income tax receipts are hardly rising as the people who pay nearly a quarter of the tax, the top 1 per cent of earners, have seen their incomes hit. If house prices tail off (or even if people move homes less often) stamp duty will decline. If the rise this week in national insurance contributions (NICs) hits employment among the higher-paid, as is plausible, revenues from both it and income tax will fail to meet their targets.

That rise in NICs? Not much about that in the Budget, was there? The presentational genius of the Chancellor was to bring in a budget increasing the tax burden by more than any of his previous efforts without raising an outcry. He did that by getting the bad news out of the way last November and not adding to it yesterday. That does not stop the blow being felt when the diminished salary cheques hit the bank accounts on the 21st of the month.

A similar device was used to blunt opposition to increased regulation on businesses. Tie them up with progressive layers of additional red tape year in year out and companies are relieved when modest unravelling is proposed. Of course, the principle behind the simplification of VAT for smaller companies is welcome. Britain is a relatively easy place to form and run a small business, but that is not as easy as it was five years ago.

The Chancellor's penchant for fiddling with incentives and benefits is as deep-rooted as ever. There is always, in any tax system, a conflict between simplicity and fairness. The more you try to fine-tune the system to make it fairer, or just to encourage certain types of activity, such as business start-ups, the more complicated you make it.

That complexity undermines the fairness you intended to enhance. People don't understand the benefits you create and fail to use them; clever accountants spot new loopholes and exploit them in unintended ways. Public finance becomes more and more a giant recycling operation, taking in money in tax, deducting its admin costs, then handing back the money often to the people or companies that paid it in the first place. It looks grand in theory; in practice it is a mess.

By coincidence, a few hours before Gordon Brown stood up, we learnt that £2bn of benefits to pensioners went unclaimed. Yet older people, rightly, were singled out to receive enhanced benefits in the Budget speech. His principle is fine; the Government's ability to administer his plans lags dreadfully behind.

There is a more general point here. Britain's superior economic performance pre-dated Mr Brown's elevation to Chancellor. He inherited both the second four years of an eight-year boom and the benefits from the structural reforms made by the previous administration – many of which he has urged on our European competitors. He – or rather we – have managed, so far, to sustain that superior performance. All credit to that. But the structural advantages have been eroded, partly because other EU countries have begun the process of reform too, but partly because there has been some slippage from imposition of new regulations. He tacitly admitted that yesterday.

Our own faster growth has been driven by a boom in consumption funded by borrowing. We consume a higher proportion of GDP than any other large European country. Some day, we will have to cut our borrowings. We may be forced to by higher global interest rates, or we may do so of our own accord. But adjust we must.

Most of us have, in Britain, experienced Dr Pangloss's "best of all possible worlds", if that is how one might describe the fastest rise in consumption over the past five years of any large industrial country, including the United States. At one level we deserve it. There are a higher proportion of us at work than in most countries. We work long hours by European standards, if not by US or Japanese. We have still to lift our productivity, as the Chancellor rightly stresses. But given where we started from, it's not bad.

We cannot safely assume that this country can canter along at 3 per cent-plus growth, as the Chancellor assumes we will next year. That is above the long-term trend and it will be in a difficult world environment. There is nothing wrong with optimism. Economists call it confidence and we need that right now. But we may also come to regret that Miss Prudence has been dumped.