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• Alistair Darling may be the man at the despatch box, but the main architect of this Pre-Budget Report will be John Maynard Keynes. With the Government having firmly signalled its intention to support the ailing economy with a much-needed fiscal boost, the key question is just how bold it is prepared to be.
   
• The case for a loosening of fiscal policy has grown steadily stronger over recent months as the outlook for the economy has deteriorated and inflation pressures have started to subside. With the effectiveness of monetary policy impaired by the credit crunch, it is time to use every weapon in the arsenal.
   
• Of course, tax cuts and spending increases will put further strain on the creaking public finances. But with the previous fiscal framework already blown to pieces, the Government appears to have concluded that there is little to lose. And if the package prevents the recession from becoming a depression, it may ultimately improve the fiscal position.
   
• So what should we expect? The Government will have to spend at least £15bn - around 1% of GDP - just to prevent an already planned fiscal tightening from deepening the downturn in the economy. To provide a meaningful boost, it may have to spend as much as £30bn.
   
• Some of this may be achieved by bringing forward capital spending projects. But if the Government wants to boost activity quickly, it needs to cut taxes too. Moreover, tax cuts need to be targeted at those people who will spend the extra income, not save it.
   
• At the very least, Mr Darling will extend the measures to compensate those affected by the scrapping of the 10p tax band implemented in April. He may also steal some of the Conservatives' proposals on inheritance tax and national insurance. If he really wants maximum bang for his buck, however, big cuts in income tax or VAT may be needed.
   
• Of course, there is no guarantee that these measures would work. At the very least, they are unlikely to prevent the economy from contracting sharply over the next year or two. What's more, the prospect of a major fiscal consolidation at some point casts a shadow over the longer-term outlook for the economy. But as Keynes himself said, in the long run we are all dead.

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