In the wake of yesterday's Pre-Budget Report many commentators have been left wondering whether the proposed reforms are just the right medicine for Britain or a disaster that will deepen the black hole in the public finances.

The changes announced include a new top rate of income tax at 45 per cent, a temporary cut in value-added tax and government borrowing of £118bn in the next financial year.

Writing in today's Telegraph Tracy Corrigan believes the "best we can hope for is that any policies implemented at this stage will mitigate the impact of the recession and speed recovery, without jeopardising confidence in the UK's creditworthiness (as the country now has a colossal amount to borrow)." But was this achieved? To Corrigan's mind the universal answer is no. Corrigan goes on to say that the crucial task of this pre-Budget report was to help businesses survive the recession, but as Corrigan states "that didn't seem to be Mr Darling's top priority". Corrigan states that some measures may prove helpful "especially to small businesses".

The FT comments along similar lines stating that "the Government talked yesterday of extraordinary measures for extraordinary times. Sadly, the most extraordinary aspect was the scale of the borrowing. The route back to financial sustainability was unconvincing – both as individual measures and taken as a whole".
Corrigan describes that "any package costing £20 billion would have left us with worries about affordability; it is only worth the risk if the measures stand a decent chance of working". The FT also shares Corrigan concerns about the sheer scale of the borrowing, writing that the Government "will need to borrow a total of almost £200bn across this fiscal year and next, more than £3,000 for every man, woman and child". The FT believes that "what was missing ahead of the chancellor's words was the most important element: where the money is to come from to put the UK public finances back on a credible footing".

However the FT acknowledges that the tax increases are sizeable outlining that "changes to national insurance should produce about £4bn in 2011-12, while rises in alcohol and tobacco duty contribute another £1bn. The 45 per cent top income tax rate contributes a mere £670m, and the restriction of personal allowances for higher earners, which takes the extra amount raised from richer taxpayers to £2bn". The FT believes that package of measures for small businesses is welcome, however, "ensuring that banks lend appropriately to businesses and home owners is still a long way away from being achieved".

FT believes that "more promising for unfreezing the home loans market is a plan, put forward in the Crosby review of the mortgage market, for government guarantees for securities backed by new mortgages. Robert Peston at the BBC reiterates findings in the Crosby review that "the Treasury auction £100bn of insurance to wholesale providers of funds, which banks would then lend in the form of mortgages" may be a good starting point.

Writing in The Times Andrew Haldenby, director of the independent think tank Reform, states that "the Chancellor's plans to cut taxes on less well-off people through a temporary reduction in VAT, and to raise taxes on the richest, is unlikely to provide a fiscal stimulus". Haldenby believes that what is needed is a "fundamental change of culture". Haldenby outlines that Britain's "obese economy" has become used to bingeing on unsustainable levels of debt and consumption". He continues by stating that Britain "needs to find a new path based on a high savings economy that encourages sustainable long-term growth".

A more optimistic outlook is given by Will Hutton in the Guardian who outlines that states that the Pre Budget Report was an "almost great economic statement – rising to the seriousness of the situation with boldness and sometimes real imagination". However Hutton goes on to state that "the report is only almost great, because the chancellor could have done more to mitigate the inevitable risks and hazards. He has chosen to wait until next spring to introduce measures to restore the flows of mortgage finance – far too late – and he has been far too minimalist in measures to get bank lending going".