Budget 2011: Middle earners to be squeezed even more in days, new inflation index means less take home pay next year AND you'll work longer for a pension

George Osborne put himself on the side of struggling middle earners yesterday as he unveiled petrol and income tax cuts.

The Chancellor said his second Budget was designed to ‘put fuel in the tank’ of the backfiring British economy. But with weaker than expected economic growth, it was becoming clear last night that there were some nasty surprises lurking under the bonnet.

David Cameron warned there 'is a difficult road that we have to take' when asked what life will be like in five years time as he visited Nottingham with Nick Clegg.

And today an influential think tank said there is a one in three chance he will have to raise taxes or cut spending to meet Mr Osborne's deficit reduction plan.

The Institute for Fiscal Studies said high inflation and sluggish growth meant there was a '30 per cent chance' the country struggles to hit the targets.

An analyst said the coalition Government could also struggle to meet its pledge to raise real terms spending on the National Health Service in every year of the current parliament.

She said that the worsening economic outlook forecast by the Office for Budget Responsibility meant that the NHS appeared to be heading for a real terms spending freeze over the next four years - representing the tightest settlement since the 1950s.

Analyst Gemma Tetlow said there was a risk NHS spending targets will be missed.

'They are susceptible to the possibility that either changes to the spending figures or changes to inflation could easily tip them the wrong side of zero,' she said.

Despite Mr Osborne's declaration in the Budget that he did not need to raise any more cash, she said he may need to in future years.

'There is a 30% chance further tax increases or deeper spending cuts will be needed,' she said.

Yesterday the Chancellor's moves to ease the pain of the soaring cost of living and boost enterprise were accompanied by announcements that will mean millions working longer and paying more tax.

In his boldest long-term reform, the state pension age is to be linked to rising life expectancy, raising the prospect of employees having to wait until their 70s to retire – though they will get a more generous £140-a-week payment.

Mr Osborne skated over a change in how annual thresholds for some taxes are calculated, which will mean millions paying more in national insurance and capital gains tax and having lower ISA limits than they expected.