MercoPress. South Atlantic News Agency

Opposition accuse PM Brown of “full retreat” in fiscal stimulus measures

Osborne: “Borrowing out of the downturn is no solution”

British Prime Minister Gordon Brown has been accused of being in “full retreat” over his recession-fighting strategy amid signs that any further fiscal stimulus measures would be severely limited by worsening economic conditions.

The Prime Minister indicated the need for further cash injections to help kick-start growth had to be set against the need to balance the books in future years. The Tories claim that Mr Brown's remarks were the latest indication that their opposition to borrowing Britain's way out of the downturn had been proved correct.

In an interview with The Independent, Mr Brown said: “It's not just what we do to give real help now, but about setting a path for the future as well. We always take into account what we need and what is best in future for the fiscal position.”

Mr Brown emphasised that environmentally-friendly measures would be a major focus of the Budget. They included plans to extend the use of electric cars, with trials for electric cars expected to begin next year in two or three cities.

His comments came after Bank of England Governor Mervyn King warned that the country could not afford another big stimulus package to boost the economy.

Chancellor Alistair Darling is expected to set out in this month's Budget how the economy's deterioration has been worse than he anticipated in last autumn's Pre-Budget Report. There are suggestions that, with public borrowing significantly overshooting projections, he may be forced to herald tax raises when he makes his statement on April 22.

Shadow chancellor George Osborne warned that the “politics of prosperity is giving way to the politics of austerity”. In a speech to the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), Mr Osborne said the Tories had consistently cautioned against increased borrowing.