Conservative calls for business credit scheme

"They don't think that Britain can get on top of their debts. There is also a catastrophic loss of confidence in economic leadership in this country."

FAITH FADING

Osborne said far from pump-priming the economy, the government had undertaken little discretionary fiscal stimulus beyond the VAT cut. He criticised one of the government's schemes, the trade credit insurance scheme, saying it had only helped 58 businesses so far.

Osborne said a credible plan was needed to reduce the budget deficit, set to hit 175 billion pounds, or more than 12 percent of gross domestic product this year, to maintain confidence at home and abroad.

"Because there is no credible fiscal plan to deal with the borrowing problems coming from the government there is a lack of confidence in the UK's ability to live within its means," he said.

Osborne set out his party's fiscal plans at this month's Conservative conference, including speeding up planned rises in the state retirement age and shaking up the welfare system.

Labour has said it would push for its toughest public sector pay deal for decades by seeking a pay freeze or small rise for the 750,000 best paid staff on the state payroll as part of its own plans to cut the deficit in four years.

The government will also recommend to pay review bodies there should be no salary increase in the next financial year for senior groups such as judges, top health service managers and family doctors.

(Reporting by Avril Ormsby; Editing by Patrick Graham)