Chancellor Alistair Darling has been defending his Budget claims that the country will return to economic growth by the end of the year.

He set out plans for a tax and spending squeeze that will bring in £6 billion by 2012 rising to £17 billion by 2014, although that will still not bring the Budget back into balance until 2018.

But his sums depend upon a forecast growth rate of 1.25 per cent next year, rising to 3.5 per cent in 2011 and most analysts see those figures as wildly optimistic.

The International Monetary Fund has issued its own forecasts predicting the UK will still be in recession next year, shrinking by a further 0.4 per cent.

The IMF forecast for the current year was also more pessimistic than the Chancellor's, estimating a 4.1 per cent contraction in output.

How far the economy has shrunk so far this year will become clear on Friday when the official figures on GDP for the first quarter are released by the Office for National Statistics.

Mr Darling insisted that he had "good grounds" to be confident following the concerted action taken by governments around the world to stimulate their economies.

However the Tories said that he had delivered a "dishonest Budget" based on "fantasy forecasts".

The Confederation of British Industry also cast doubt on Mr Darling's figures saying that they looked "optimistic".

"The key question for this Budget was whether it set out a credible and rigorous path for restoring the public finances to health. The CBI's preliminary judgment must be that it does not," said CBI director general Richard Lambert.

"The Chancellor's economic forecasts for next year and beyond look optimistic. By pushing out the horizon for balancing the books as far as 2018 the Government is running too much of a risk."

His comments were a blow for Mr Darling who needs to convince the markets that he can get the public finances back on track if he is to be able to continue the borrowing he needs to get through the recession.

In the main surprise of a heavily-trailed package, the Chancellor announced that he was raising the planned new top rate of tax on incomes over £150,000 from 45 per cent to 50 per cent.

At the same time he said that he would be bringing forward the implementation by 12 months to April next year - which means that it will almost certainly come in before the next General Election, breaching a Labour manifesto pledge.

People with incomes over £150,000 will also see their pension tax relief restricted from 2011, while personal allowances will be scrapped for those on incomes over £100,000 from next April.

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