Shortfall in revenue complicates George Osborne's career prospects as well as the Budget

Asked about what he most feared in politics, Harold Macmillan – according to legend – once replied, “Events, dear boy, events!” George Osborne might well be thinking of that refrain right now – the “event” in his case being the emergence of a large black hole in the economy that threatens to derail all his plans for this week’s Budget.

Not long ago, this looked like being a relatively easy Budget in political terms. With no election in sight and Labour seemingly more interested in attacking itself than the Government, it was shaping up to be the Budget that helped the Chancellor to nail down his prospects as a future leader of the Conservative Party. He would hand out some well-aimed gifts to the better-off – the kind of people who can be relied on to vote Conservative – by raising the higher-rate tax threshold to £50,000 for a start. At the same time, he would confirm his overall reputation as the man who restored order to the nation’s finances.

Those neatly laid plans lie in disarray as an £18bn shortfall – blamed mostly on lower than expected tax receipts – makes a further sharp squeeze on public spending inevitable while rendering giveaways for the better-off politically risky. It is doubly depressing for the Chancellor, when the Office for Budget Responsibility only last autumn was predicting that he would have an extra £27bn to play with. Now, wherever his axe falls and whatever raids he makes on the nation’s wallets through new stealth taxes, such as a rise in fuel duty or in insurance premiums, he will find it a struggle to meet his targets of reducing public sector debt and running a budget surplus by 2020. The would-be Iron Chancellor is turning out to have feet of clay.

Always an agile politician, especially when backed into a corner, Mr Osborne has taken pre-emptive action. On Sunday, he was busy preparing the country for grim news – a good tactic, especially if you have a few sweeteners stashed away somewhere for a rainy day. “We need to act now, so we don’t pay later,” he said, somewhat cryptically, adding regretfully that the world had become “a difficult and more dangerous place”.

Many people will probably accept that it is. However, even if the voters grudgingly accept that Britain can only do so much about a general slowdown in the world economy, no one likes the bearer of bad news. Some of Mr Osborne’s colleagues in the Cabinet will be furious if they are told to make extra cuts to their already savaged departments. Tory MPs may well become restive, too, especially if the price of petrol goes up. Some of them have already discovered how easy it is for a relatively small number of rebels to humiliate the Government, as the recent defeat on Sunday trading hours showed.

In terms of Mr Osborne’s own career prospects, this black hole could not have come at a worse moment. By the time David Cameron starts clearing his desk, probably some time in 2019, Mr Osborne had hoped to position himself as the candidate of safety, as opposed to the mercurial and untested Boris Johnson.

The Chancellor knows he is not much loved either in his own party or in the country, and was hoping to override that little difficulty, and Mr Johnson’s more obvious appeal, by presenting himself as the man who delivered economic stability. Now he risks going into a contest against Mr Johnson with no obvious unique selling point except a reputation for cleverness. He can, of course, claim that things might well have been worse under someone else – but it is not the best campaigning slogan for a would-be prime minister.