THE MARKETS

Confused about the Budget? Perplexed by the speculation? Worried there might be a crackdown on your threshold, or a squeeze on your middle? Well here is a point-by-point guide to the politics of Wednesday's event:

1) The government's basic economic strategy will not change: The one thing the coalition parties have not argued about is the need to keep cutting the deficit at the pace they have set. There will still be many, many billions of spending cuts this year and against them, most of the tax changes announced on Wednesday will pale into insignificance.

2) The basic economic numbers will not change: Few economists are expecting the Office for Budget Responsibility to up or downgrade significantly its basic forecasts: how much the economy is - or is not - going to grow; how much borrowing will rise; what will happen to debt and so on.

3) This will be a fiscally neutral budget: There will be no "unfunded giveaways," to quote the chancellor. Every tax cut will have to be paid for by a tax rise elsewhere. This in itself is a political choice. Labour would probably like to borrow a touch more to do what it would want to do, like cut VAT. Many Tories would like to cut spending more so they could cut business taxes further. But George Osborne will simply make some people pay more so others can pay less.

4) But the politics will change: The two coalition parties are carving out the meat of their offer for voters at the next election. The Lib Dems will claim that it is they who are leading the drive to take millions of lower paid workers out of income tax. The Conservatives will argue that, as well as cutting tax for middle earners too, they are also making the economy more competitive by trimming corporation tax and - maybe - cutting the 50p top rate of tax.

5) The Budget has tested the seams of the coalition: The Lib Dem strategy of negotiating in public has irritated some Tories. But George Osborne has been explicit in making clear that this has been a coalition Budget, and as such will "satisfy a broad range of public opinion". The risk is that it looks like a Budget that has been agreed in the interests of the coalition rather than in the interests of the nation.

6) At the heart of this Budget is likely to be a deal: George Osborne is likely to take more low earners out of income tax and squeeze the rich by making it harder for them to avoid tax and by capping the number of allowances and reliefs they can claim, the so-called "tycoon tax". In return, he has carved himself the political space and cover to start cutting the 50p rate, if that is what he wants to do.

7) A note of caution on income tax: Taking people out of income tax is good for people who are not paying tax any more. It is less good for poor people who do not pay tax already. It is less good for people who have to start paying the top rate of tax as a result. It is also less good for people who only have one earner in the family compared to those who have two earners, both of whom can benefit from the tax cut.

8) The big risk for the Conservatives would be cutting the 50p top rate of tax: The risk is that they will be accused of helping rich people earning more than £150,000, and no amount of a crackdown on tax avoidance by the rich will overcome that. Some Tory MPs think it could put at risk David Cameron's attempts to modernise their party. And if the chancellor cuts the rate from 50 to 45p, will the gain in business confidence really outweigh the political downside. Is a 5p cut really enough of a signal to foreign investors to come and do business in Britain? What is 5p among friends? Surely, if Mr Osborne is going to take the risk, he might as well go the whole hog and abolish the rate entirely so that more rich people stay in Britain - as the argument goes - and pay more tax in the long run.

9) The big risk for the Liberal Democrats would be agreeing to cut the 50p rate: Many of the party's natural supporters struggle to understand why helping rich people should be a priority. Others - like the party's former Treasury spokesman Lord Oakeshott - believe the party should not agree to any cut in the 50p rate unless they get a mansion tax in return. The tricky task for George Osborne will be to try to show that overall the rich will pay more tax and the poor less.

10) Do not think the European problem has gone away just because Robert Peston isn't on the telly talking about it every night: As George Osborne told Andrew Marr: "Just because the European Central Bank is putting a lot of money into the eurozone does not mean some of the fundamental problems have been resolved and you know that remains a major risk to the UK and the rest of the world."

11) Ignore the slogans: A "Budget for working people" can mean a lot of things to a lot of people. Will, for example, Mr Osborne reverse his planned cuts in working tax credits which is, of course, a tax rise for, er, working people?

12) There is a fight that has yet to be had over planning: This divides the Conservatives. Some believe the new planning reforms published this week will help boost the economy, paving the way for a flood of new houses. Others think it will simply be a developer's charter to concrete over beautiful green fields that happen not to be part of the protected green belt. Let battle begin.