The chancellor surprised the city yesterday with his upbeat assessment on the state of the economy and growth forecasts.

Despite fears of a slump, Gordon Brown said the UK would see a shallow downturn followed by a sharp rebound in its economic fortunes.

However, he announced a sharp rise in public borrowing - rising to £10 billion in 2002/03. He said that tax revenues would be "significantly lower" than predicted over the coming 18 months.