The Chancellor now expects gross domestic product to contract 4.75pc this year in the worst peacetime performance of the economy since the 1930s. That’s worse than a prediction of 3.5pc he gave in the Budget.

However, Mr Darling stuck with his Budget prediction that the economy will grow between 1pc and 1.5pc in 2010 and accelerate to a 3.75pc pace in 2011.

“I’m confident the UK economy will start growing by the end of the year,” Mr Darling told Parliament. “To cut support now (for the economy) could wreck the recovery.”

In the widely-anticipated pre-Budget report, the Labour government is under pressure from financial markest to lay out a credible plan to cut Britain’s budget deficit wtihout jeopardising a fragile recovery.

Mr Darling said today that the country’s Budget deficit this year will be £178bn, up from a forecast of £175bn he made in the Budget. The Chancellor added that borrowing will edge lower to £176bn in the next financial year.

Over the next four years, Mr Darling expects the deficit will reach £611bn, up from the £606bn he predicted in the Budget.

Emboldened by recent polls showing the Conservatives’ lead is narrowing, Gordon Brown is keen to paint the opposition as the party of the rich at a time when many in Britain still face the threat of losing their jobs.

Mr Darling said today that he will impose a one-off tax of 50pc on banks for all bonuses awarded above £25,000. The tax will start today and run until April 5.

Mr Brown’s strategy comes as many banks, including state-owned Royal Bank of Scotland, prepare to pay staff multi-million pound bonuses just over 12 months after the worst financial crisis since the 1930s.

Financial markets will be focused on whether the Chancellor delivers a credible plan for meeting a pledged outlined in the Queen’s speech to cut the country’s deficit to 5.5pc of gross domestic product by 2013-14 from a projected 12.4pc this year.

The ratings agencies that determine Britain’s creditworthiness as a borrower in international bond markets have already warned that a failure to spell out concrete measures will leave the country at risk of losing its prized ‘AAA’ rating.

George Osborne, the shadow chancellor, has accused the Government of not being aggressive enough in cutting the deficit and is likely to renew his attack today.