Treasury plays Budget Eeyore to the government’s Tiggers

11 Downing Street Image copyright Getty Images

"We haven't had an earthquake lately," was Eeyore's tart response when asked about forecasts that the weather can only improve in the Hundred Acre Wood.

As government colleagues speak boldly of the economic opportunities Brexit might offer and point to the better than expected economic news since the referendum, the Treasury is quietly warning there may still be pain ahead.

Eeyore to the rest of the government's Tiggers, Number 11 is hoping for the best while preparing for the worst.

Yes, the chancellor has said to colleagues, the mood has changed since the Autumn Statement.

There will certainly be some "pats on the back" when it comes to the Budget on Wednesday.

The economy is more resilient as consumers - buoyed by ultra-low interest rates, cheap borrowing and high employment - keep spending.

And among the members of the European Union there is less talk of economic "punishment" as Brexit approaches - and more of "co-operation".

I am told that one banking chief executive was even bold enough to tell the Prime Minister at a recent private meeting that in three years' time the UK's financial services sector and the economy could be in a better position than they are now.

How to follow the Budget on the BBC

Better growth also means the government's borrowing position is more positive than predicted just three months ago.

Tax receipts are higher as stronger consumer spending and higher levels of business activity feed through to the Exchequer.

The Office for Budget Responsibility - the official economic watchdog - is set to upgrade its growth forecast for 2017.

And borrowing, it is likely to say, will come in at least £10bn lower than the official target. It should be remembered, however, that that target was significantly loosened last year.

So, with a better economic outlook, will the Budget be a time for a few politically targeted giveaways?

Image copyright PA
Image caption Chancellor Philip Hammond is not planning big Budget giveaways

There will be some limited action. The Treasury was certainly stung by accusations following the Autumn Statement that Philip Hammond did not mention the NHS or social care funding despite predictions of a looming crisis.

Expect more money for social care, more money for business rate relief and more money for schools.

Individual tax thresholds - the point at which people start paying tax on their income - will also be increased, getting ever closer to the target of £12,500 of tax-free income promised in the Conservatives' 2015 manifesto.

But each move will be limited.

Yes, the Treasury will have a modicum of borrowing headroom, but officials have created a long list of headwinds that could knock the economy off course.

Eeyore still wonders if an earthquake might strike.

First, the tax base is eroding as more people join the "gig" economy - the self-employed who work for companies such as Uber and Deliveroo and pay less tax. Gig employers also pay less in national insurance and pension contributions.

Mr Hammond wants a review of the tax status of the self-employed, ready for major announcements in the autumn, when the new cycle of November Budgets begins.

Balancing the books

Treasury officials are also convinced that some of thegood news on increased tax receipts are "one-offs" - changes to self-assessment rules and corporation tax payments that will not be repeated.

Then there are the fears about the Brexit process, when officials worry that "good days and bad days" news coverage will affect economic confidence.

Inflation is also on the march, government borrowing costs on its £1.7 trillion debt load are rising and the UK's age-old productivity problem refuses to go away.

Mr Hammond and Theresa May are both fiscal conservatives - cleaving strongly to the idea that "balancing the books" between what a government receives in taxes and spends on public services is the only way to maintain economic stability and growth.

The Prime Minister apparently often interjects in policy committee meetings with the question: "Where is the money coming from?"

Given that background, better economic news and better borrowing figures are not about to lead to big Budget giveaways.

Eeyore just wouldn't countenance it.