The latest leak ahead of tomorrow's Budget suggests the chancellor will use the statement to look out how the British economy can become more innovative.

The FT claims that in order to meet the challenge of competitors such as China, Gordon Brown will commission a review into how the UK's creative industries can work with manufacturers.

Design Council chairman George Cox is expected to head up the the inquiry into harnessing computer, media and academic expertise.

"The chancellor recognises that in the years ahead, manufacturers must move towards high value-added and creative products to unlock new markets," a Treasury official said.

Meanwhile, the Telegraph reports that Brown is more resistant than ever to the idea of giving up Britain's EU budget rebate for fear of losing vital cash for his spending plans.

The Mirror says that Brown will unveil plans for a 700 per cent rise in duty-free limits for transatlantic shoppers.

The chancellor wants to raise the allowance from £145 to £1,000 for products being brought into the UK from outside the EU.