David Cameron intends Bank of England to prop up economy if recovery slows

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The Prime Minister said he would look to monetary policy to back up Britain's business health rather than scale back the Government's deficit reduction plans.

"We want monetary policy to do the work," he said when asked whether he was prepared to hold back on spending cuts.

Cameron said a problem facing Britain was that companies were unable to benefit from low interest rates.

"One of the issues is still bank lending. There is still something to be done. We want to make sure money is getting out of the banks to the businesses."

He suggested he would be open to the Bank embarking on more quantitative easing, which it again voted to hold at £200 billion this month. It also decided to keep interest rates at their record 0.5% low.

Most analysts expect the Bank to up rates around the turn of the year rather than loosen policy further, particularly after one member of its monetary policy committee, Andrew Sentance, voted for a raise this month because of worries about persistently high inflation.

The Prime Minister will meet G20 and G8 leaders this weekend for talks on how the world economy can rise from the downturn.

He said: "This weekend isn't about a row over fiscal policy. We all agree about the need for fiscal consolidation. For me, this G20 is about putting the world economy on an irreversible path to recovery."