By Edwin Lane Economics reporter, BBC News

Chancellor Alistair Darling has warned repeatedly that Wednesday's Budget - the last before the general election - will be unlikely to hold much cheer.

THE UK ECONOMY IN GRAPHICS Economic recovery Unemployment Public finances Public spending Markets' reaction

There would be "no giveaway", he told the BBC, saying that the Budget would reflect the "times in which we live".

It is an acknowledgement of the huge economic challenges that still face the country, and the restrictions those put on the chancellor's Budget plans.

The first challenge is to sustain the fragile economic recovery , which saw the UK emerge from recession with a growth rate of 0.3% in the last three months of 2009.

Economists are divided over the strength of the recovery, and the risk of the economy falling back into recession.

The state of the economy has a direct impact on unemployment , which has risen to its highest level since the early '90s as struggling companies lay off staff.

Measures to keep people in their jobs have been repeatedly cited as a priority for the government.

But, like other stimulus measures, it is limited in what it can do because of the dire state of the UK's public finances .

The UK's budget deficit - the gap between the amount it spends and the amount it earns through taxes - is forecast to rise to up to £178bn this year.

That will push up the total amount of government debt to £850bn.

In order to start paying back that debt, the deficit will need to be closed in the coming years, and that means either increasing taxes or making cuts to public spending , or both.

Alistair Darling has defended his plan to cut the deficit by half over four years, arguing that faster cuts risk harming the recovery.

His plans for the budget deficit and expectations for the economy as a whole will be closely watched by investors in the UK economy, and the financial markets they invest in.