The general election campaign starts in earnest today. Whatever economic conjuring tricks Alistair Darling manages with the public finances in such a parlous state, his political sleight-of-hand will set the terms for the electoral contest that must take place before May 2010.

The Labour Party has fought the last two elections on the slogan that it would provide investment in public services whereas the Conservatives were pledged to cuts. When tax receipts were buoyant and growth was healthy, it was a powerful argument and the Conservative Party spoke its scripted lines obediently. That argument, in that form, is now surely incredible. Even if the Chancellor renames cuts as efficiencies, spending will have to fall.

This is not to say that the Chancellor, under pressure from Gordon Brown, will not try. With chutzpah that will take the breath away and never give it back, he will argue that only the Labour Party can manage the public services to ensure that efficiencies will not result in serious cuts to schools, police, GPs and hospitals.

The flaws in a strong version of this argument are obvious enough. If such efficiencies are possible why was the electorate told the exact opposite at the last general election? And if the public services have been operating at a level of gross inefficiency for such a long time, why has the Government been so tardy in putting it right?

That makes this Budget an important political moment. In order to get elected in 1997 the Labour Party made a fundamental compromise with its own history, embracing aspiration and shedding its inclination to tax the rich. After three emphatic electoral defeats, the Conservative Party committed itself to the defence of public services and put aside its instinctive belief in lower taxes and lower spending. For a brief period, the two parties met in the middle. Their respective compromises are about to be tested. This could be the Budget that finally shatters the Blairite consensus that has dominated politics for more than a decade.

Will Labour turn to top earners to plug the colossal hole in the public finances? Will the Tories have to make sweeping cuts to government programmes and benefits to avoid tax rises? Can Labour risk being associated again with the desire to curb aspiration? Can the Conservatives risk regaining their reputation for austerity at the loss of their claim to have changed?

The Chancellor will today strive to set the new terms of division between Left and Right. On the one side, the burden of efficiencies, he will argue, will fall on those most able to bear them. On the other side, he will say, the Conservatives will return to type and pare back the State to the point that serious cuts to services are inevitable. This is the updated version of investment versus cuts: protection versus cuts. The Conservative Party then has to calculate whether to argue for a more fundamental reassessment of the scope of the State or whether to stay as quiet as possible.

Of course, all these well-laid plans will turn to dust if recovery does not come soon. If efficiencies are serious cuts by another name, if the public finances take a decade to repair, if the tax receipts from financial services do not return, then all of this is sound and fury anyway.

Today's Budget opens a period of very tough choices. The Labour Party will have tough choices to make on where the axe must fall and on where taxes must rise. The Conservative Party will have a tough choice on whether to emulate its old self and argue strongly for greater spending restraint. There will be more than an element of unreality in such choices. Not every unpalatable option will be openly revealed. On such terms the choice will then pass to us, the electorate, to decide.