Andrew Grice: The shy man under pressure to be bold with the Budget

Inside politics

Alistair Darling can't remember a single "good news" day since he became Chancellor in 2007. Yet the shy man at the Treasury retains his dry sense of humour. When his wife, Maggie, who loves buying people pressies, goes shopping, he quips: "How big will the domestic fiscal stimulus be today?"

He won't be cracking many jokes about the scale of any fiscal stimulus in his Budget on 22 April. Gordon Brown and some cabinet ministers are privately urging him to give the economy another boost in the hope that this would pull the country out of recession sooner rather than later.

Mr Darling is playing down expectations for his Budget, which is widely seen in Labour circles as the party's "last chance" to revive its election prospects. Although the Budget is only five weeks away and Treasury meetings are under way, the word is that it is "early days" because the global crisis is so fast-moving.

The Chancellor's room for manoeuvre will be influenced by the G20 summit in London on 2 April. If the leaders of the 20 rich and emerging economies agree on a further fiscal stimulus by national governments, it could give Mr Darling the cover to opt for a further boost in Britain.

The prospects of achieving Mr Brown's "global new deal" will be a little clearer when a meeting of G20 finance ministers at a West Sussex hotel, chaired by Mr Darling, finishes this afternoon. He is pressing for concrete proposals, and sometimes finds these "talking shop" gatherings frustrating. But if these complex international negotiations are tough, his Budget will be even harder.

The Chancellor is worried that great Budget expectations are being aroused that he will struggle to fulfil. While prepared to do "whatever it takes" to limit the downturn, he will already have to revise the sky-high borrowing figures of £118bn for the financial year starting next month, that he announced in his pre-Budget report in November. A longer downturn means lower tax revenues and a higher benefits bill. He was banking on a short, sharp recession, but will have to eat some humble pie on 22 April by admitting the economy will not start growing again this summer. He will blame a worse than expected global slowdown.

There is no shortage of ideas being pressed upon him by cabinet colleagues. Some want a drive on "green industry" to conjure up a positive vision of post-recession Britain. Mr Brown has floated the idea of tax cuts on pensioners' savings. Across Whitehall, civil servants retrieve pet schemes from dusty shelves and tell their ministers: "We could dress this up as a fiscal stimulus."

No wonder Mr Darling has been heard to sigh: "Where's the money coming from?" Treasury insiders admit there will be tensions between him and Mr Brown, who will be inclined towards a bigger stimulus. One official said: "There is no row yet. But there will be an argument."

The Chancellor is not opposed to a further stimulus, on top of the £20bn announced in the pre-Budget report. But if he does spend more, he will want to reassure the financial markets about how the extra borrowing will be repaid, to prevent the Government's ability to raise money on the financial markets being questioned.

Some cabinet colleagues want higher taxes for the rich now, rather than in 2011, when the new 45p rate on incomes of more than £150,000 is due to kick in. They believe the higher rate would be popular with most voters who are angry about the pay, bonuses and behaviour of bankers.

Mr Darling is at the cautious end of the cabinet spectrum. Yet allies insist it is caution with a purpose. "He just wants to get it right, to stress-test everything first," one said. Aides say he only loses his cool when a plan is leaked before it has been properly tested or when he believes officials or ministers are being obstructive.

He doesn't burn the midnight oil like his Downing Street neighbour Mr Brown but is normally at work by 7am and likes to arrive with a clear plan. There have, however, been many days of late when his plan has been blown off course by events – and grim tidings from the officials who troop into his office. He has opened meetings of his inner circle with a quip of "How bad is it today?" He has shown his frustration that the banks have not resumed lending, asking more than once: "Why is this not working?"

Mr Darling's style is different to his predecessor's. He is more collegiate, in the Cabinet and Treasury itself. His department's "twentysomethings" were surprised to be called into his inner sanctum to brief him. Under Mr Brown, the system was more top-down. He decided what he wanted and dispatched the "two Eds" (Balls and Miliband) to spread the gospel.

Unlike President Obama, Darling's allies joke, the Chancellor can't dump on his predecessor. He wouldn't want to anyway. While prepared to stand up to the Prime Minister in private, he is a loyalist at heart and doesn't brief the media about it. In Cabinet, Mr Darling wins plaudits for his calm amid the storm. Ministers say his media performances have got better even as the economy has worsened.

Yet he is probably about to disappoint several cabinet colleagues in his Budget, including the "what have we got to lose?" contingent egging him on to be bold. They argue an immediate tax rise for the rich, re-engineering Whitehall spending (with real cuts in non-essential areas) and a big "green jobs" push would give the voters the shock they need to see that the crisis is more serious than the "funny money" talk in trillions implies.

The radicals say Labour can reinvent itself in office by seizing the moment of the new economic times and raising the Budget stakes. As one cabinet member put it: "If we bite the bullet, we could be in power for another 15 years. If we don't, we could be out of office for a generation."

The radicals will probably be disappointed. Mr Darling hopes that the measures already in place – the bank rescue, lower interest rates, a fiscal stimulus, boosting the money supply – can bring Britain out of recession earlier than its rivals.

But the political clock is ticking faster than the economic one – 3 June 2010, the last possible election date, is looming. Many people didn't feel pain from the recession until six months or so after it began. The fear among Treasury ministers is that people won't feel we have come out of it until six months after it ends. Mr Darling's biggest problem may turn out to be not a lack of money but a lack of time.