Rishi Sunak will focus on "critical support" for businesses and households in his Budget rather than immediate efforts to balance the books, a Cabinet colleague indicated.

The Chancellor has said his address to MPs tomorrow will be characterised by "honesty and fairness", indicating he will set out how he intends to begin the task of repairing the public finances which have been battered by coronavirus.

Business Secretary Kwasi Kwarteng played down the prospect of immediate large tax increases but said Mr Sunak had acknowledged the country could not "go on spending money forever".

"For now, what we have to do is support businesses, individuals, families, through what has been an extremely difficult time," he told BBC Breakfast.

"We have got another three years to run in the parliament and the Chancellor will be looking to reduce the deficit.

"For now, I think the real emphasis is on trying to provide critical support."

Mr Kwarteng also appeared to confirm that the furlough scheme will be extended.

"I think the Chancellor has already indicated that we will be extending furlough," he said.

"I think that has been part of a public announcement. I think there will be other measures that we will see tomorrow."

He told BBC Radio 4's Today it was a "fairly good assumption that while lockdown persists there will be additional support".

"I think it is really important that we don't crush the recovery before it's happened," he said.

"In order to keep people's jobs going, in order to keep companies going we need to continue providing support. I think there is every indication that is what the Chancellor will do.

"My view is that the way to get out of this difficult situation is to grow the economy."

If the vaccine rollout proceeds successfully and the economy is reopened by June 21 - as envisaged in England's road map - then "there is every chance that the economy can bounce back, we can see strong growth at the end of 2021 and that will be the best way to deal with the growing deficit".

But former Tory leader Lord Hague - an ally of Mr Sunak, who succeeded him as MP in Richmond, north Yorkshire - bluntly warned that taxes would have to go up to pay for the cost of coronavirus.

That could result in a clash with Tory MPs who want a low-tax economy and find themselves in alliance with Labour leader Sir Keir Starmer, who has warned that now is not the time to increase levies on businesses and families.

The Office for Budget Responsibility (OBR) will publish its latest forecasts alongside the Budget tomorrow - with Boris Johnson expecting a recovery to be "much stronger than many of the pessimists have been saying over the last six months or so".

In its November forecasts the OBR indicated the national debt could reach 105 per cent of gross domestic product - a measure of the size of the economy - in 2020/21, with a record peacetime borrowing of £394 billion.

Writing in the Daily Telegraph, Lord Hague said: "It pains me to say, after spending much of my life arguing for lower taxes, that we have reached the point where at least some business and personal taxes have to go up."

He warned that those who opposed some form of tax rises in the current climate were buying into "dangerous illusions".

Ahead of Wednesday's Budget:

  • It was revealed nearly £410 million will support the badly-hit culture sector.
  • A £300 million summer sports recovery package will help cricket, tennis and horse racing.
  • A £150 million fund will help local communities save struggling pubs, sports clubs, theatres and Post Offices.
  • A £520 million initiative will be announced to support small UK businesses with training and software.
  • Some £2.8 million will help fund a joint UK and Ireland bid to host the 2030 football World Cup.
  • The fuel duty freeze is set to continue, with Prime Minister Boris Johnson telling The Sun: "I firmly believe the economic recovery is going to be powered by White Van Man amongst others."

The Treasury set out details of the funding packages for the beleaguered culture, sport and pub trades which have seen profits and activity knocked since social distancing was introduced at the start of the Covid-19 outbreak last year.

Mr Sunak is expected to pump an extra £300 million into the £1.57 billion Culture Recovery Fund, as part of the measures.

National museums and cultural bodies will also receive £90 million to help keep them afloat until they can open their doors on May 17 at the earliest and £18.8 million will be provided for community cultural projects.

An additional £77 million will be given to the devolved administrations in Scotland, Wales and Northern Ireland to provide their culture groups with similar backing.

Shadow chancellor Anneliese Dodds told the PA news agency that businesses had been "calling for weeks and weeks for certainty around things like the business rates holiday extension" and "clarity" over the furlough scheme.

Amid speculation that Mr Sunak could impose tax rises in order to cut them again ahead of the next election, Ms Dodds said the Tories were "focused potentially on party political issues, how quickly they could get any tax changes through, that's not what's needed for our economy right now".