GORDON BROWN’S ambition to become Prime Minister rests on his continued success as Chancellor. Any doubts about his reputation as Mr Fiscal Prudence, and he will no longer look the automatic, the inevitable successor to Tony Blair.

Today, in his Pre-Budget Report, Mr Brown will try to lift our eyes to the long term, offering “a patriotic vision of Britain’s future as a country of ambition and aspiration”. He is one of the few leading politicians to think globally. He will talk about the growing challenge from India and China and the need to improve our science base, enterpreneurship and skills.

All this makes good sense. But his statement is inevitably being seen at Westminster in political rather than policy terms. It is Mr Brown’s alternative Queen’s Speech, the hope as opposed to the fear, the opportunity as opposed to the security, his agenda for a third term and his platform for what he would do as Prime Minister.

But, as Mr Brown would be the first to admit, these long-term hopes for Britain and for himself, depend on continued economic and monetary stability. That has been the cornerstone of his chancellorship. But it is precisely this stability that is now in question.

A striking feature of the economic comment of the past fortnight has been the near-universal forecasts that Mr Brown will have a “black hole” of around £10 billion to £12 billion. Under the Chancellor’s “golden rule”, government is supposed to borrow only to finance investment, while current spending and revenues should balance over the course of an economic cycle. Any current deficits and surpluses should cancel each other out. But the main independent forecasters believe that this balance will be missed and there will be a structural deficit.

Oh, no, there won’t, says Mr Brown. He has claimed repeatedly that the golden rule will continue to be met. There are arcane arguments between economists about the definition of the rule: how long does an economic cycle last, and are surpluses and deficits measured in cash terms or as percentages of national income? Even leaving these points aside, Mr Brown believes that sceptics, notably the Institute for Fiscal Studies, are wrong about the current state of public finances. High oil prices are boosting tax receipts, especially in the next few months. Yet public spending is now rising faster than forecast in the March Budget.

Even if Mr Brown confounds his critics again today over the short-term position, he still faces a longer-term credibility problem: whether the growth of public spending can be sustained or whether further tax increases will be needed, as the OECD gave warning yesterday. The consensus view, outside the Treasury, is that during the next Parliament taxes will either have to rise or spending growth will need to slow.

Either option is unpalatable for Mr Brown personally and for Labour electorally. Oliver Letwin, the Tory Shadow Chancellor, and Vincent Cable, the Liberal Democrat Treasury spokesman, have both seized on these forecasts in the hope that warnings about tax rises will detach voters in Middle Britain. Yet there is also a trap for the Tories in particular. The more they claim that Mr Brown is breaking his fiscal rules and that taxes will have to rise in the next Parliament, the harder it becomes for them to make the case for tax reductions.

Mr Letwin’s answer — challenged in the Commons yesterday by Mr Brown — is that much of the recent increase in spending, and hence the higher taxes, has been wasted, that Labour has failed to deliver value for money. The Tory alternative, based on the reviews conducted by David James, is that £30 billion can be found from removing “excessive and unnecessary bureaucratic activity” — freezing Civil Service recruitment, scrapping strategic health authorites and the like.

Some of this overlaps with the Treasury’s Gershon review of efficiency, while Mr Letwin reckons that £10 billion of savings can be found fairly quickly by exercising “political will”. The Tory plan is that some of the savings will be used to remove any inherited structural deficit. And with the growth of spending being cut, he hopes to have some left over for tax cuts.

That is why it is vital for Mr Brown to show both that past spending has produced positive results in, for example, health and education and that future increases are affordable. He has several strong economic arguments on his side. Inflation and interest rates remain pretty low (though are forecast to rise further by the OECD), unemployment is low and the overall level of public debt here is much, much lower than the rest of Europe. Even if the critics are right about the “black hole ” or structural deficit, it will still only be about 1 per cent of national income. This is small compared with the budgetary problems faced by Italy, Germany and France in meeting the guidelines of the EU Stability and Growth Pact.

So any fiscal problem here is containable. But Mr Brown has perversely made it worse for himself by his insistence that everything is fine. He hates criticism or to admit that he has done anything wrong. He is a fiscal Panglossian. But life, let alone spending and tax forecasts, is seldom perfect. We live in a 90 per cent world at best, not the 100 per cent world of Mr Brown’s statements. He would do himself a favour if he occasionally admitted that things do go wrong, even in the best of all possible worlds. That would give him a cushion and room for manoeuvre. As it is, having won all the plaudits in the past, Mr Brown risks excessive criticism now — and undermining his own long-term ambitions.

Times Recommends

• 'Tis the season for all things garish
• Don’t let auld acquaintance be forgot
• Gove’s guide to a simply glorious Christmas