BROWN DEFENDS HIGHER BORROWING

Despite criticism of the Government's plan to spend its way out of the downturn, the Prime Minister indicated he would not try to reduce debt until tax revenues recover.

His comments came as Chancellor Alistair Darling was preparing to replace Mr Brown's fiscal rules with new targets on public borrowing to accommodate the new economic climate.

The Tories went on the offensive, accusing the premier of borrowing out of necessity rather than for the good of the country. But, speaking to business leaders at Imperial College London, Mr Brown insisted Britain had to make the necessary long-term investments to benefit from the "new global age".

Now was the wrong time to slash investment in areas like education, training, energy efficiency or tax cuts for hard-pressed families, he said.

"That means that the responsible course of government is to invest at this time to speed up the economic activity," the Prime Minister said.

"As economic activity rises, as tax revenues recover, then you would want borrowing to be a lower share of your national income. But the responsible course at the moment is to use the investments that are necessary, and to continue them, and to help people through very difficult times. I think that's a very fundamental part of what we are doing."

During a question-and-answer session, the Prime Minister also fuelled speculation that interest rates could be set to fall again soon.

Responding to Mr Brown's remarks, shadow chancellor George Osborne said: "What they are talking about is borrowing out of necessity, not out of virtue. Gordon Brown is a man with an overdraft, not a man with a plan.

"He is being forced into this borrowing. He presents it as a strategy but it is actually a consequence of his great failure that borrowing is already out of control before we even get into the worst of the economic circumstances that we are in."