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Chancellor Alistair Darling is expected to announce inheritance tax changes and tax increases for private equity firms in his first Pre-Budget Report today.

He will also reduce projected growth for the economy for next year as the credit crunch bites.

Public spending may feel the pinch as a result, although hospitals and schools have been tipped to receive more than expected when the chancellor unveils his long-term plans in the Comprehensive Spending Review to MPs.

It was the Tories who first proposed an inheritance tax cut with a levy of non-domiciles who register their incomes abroad.

To regain the initiative it is thought the chancellor may announce its own reforms to inheritance tax and close tax loopholes exploited by private equity firms.

The Chancellor will make his speech in the House of Commons at 4pm today.