Faced with a possible rebellion by Labour Party legislators over his decision to abolish the lowest income tax band, Brown and his government announced a 2.7 billion pound (US$5.25 billion) package Tuesday to compensate the bulk of those affected.

The move averted a full-scale government crisis days before a crucial by election. But it also left Britain's already strained public finances in an even more precarious position.

Government forecasts in March showed public sector net debt rising to 39.8 percent of gross domestic product in 2010-11, just a whisker below the government's self-imposed ceiling of 40 percent.

The Institute for Fiscal Studies calculates that the 0.02 percentage points of leeway implied by the March forecast equates to 2.8 billion pounds in nominal terms.

“The 2.7 billion pound tax package effectively uses up all the government's room for maneuver,” said Carl Emmerson at the IFS.

“Even on its own forecasts, the government only has a 50:50 chance of meeting its rules. Using forecasts from private economists or the International Monetary Fund, the chance is much lower.”

The government's fiscal framework revolves around two key rules devised more than a decade ago by Brown when he was finance minister.

The “golden rule” states that the government can borrow only to invest over the economic cycle while the “sustainable investment rule” limits public sector net debt to a “stable and prudent level”. The government has defined the latter as 40 percent of gross domestic product.

Asked on Thursday about a possible relaxation, Brown stood firm.

“Our rule is as it is, 40 percent,” he said.

Brown argued that pumping money into the economy was useful at a time of slowing growth and noted other countries, notably the United States, were using fiscal policy in this way.

Economists, however, say Britain's government did not save enough in the boom years to be able to spend when times got tough. They worry unfunded tax cuts now could exacerbate inflation and raise doubts over the government's commitment to fiscal discipline.

“At the margin, this fiscal stimulus will make it harder for the Monetary Policy Committee to cut rates,” said Michael Saunders, an economist at Citigroup.

“This is not so much because the fiscal package will help the economy. The bigger worry is that fiscal slippage, plus the government's repeated willingness to fudge the fiscal rules in recent years will reinforce the committee's worries about a rise in inflation expectations and possible slippage away from stability-oriented policies.”

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