Brown signals tax cuts to help the hardest hit

When asked if he was considering tax relief moves, Mr Brown said he would "make announcements very soon".

Buoyed by his success in the Glenrothes by-election, Mr Brown is determined to use this month's pre-Budget report to outflank the Tories by offering tax cuts funded by extra borrowing.

But the Tories — due to announce their tax-cut plans tomorrow — say they oppose any borrowing plans, preferring instead for the funding to come from savings in government spending.

Mr Brown fuelled expectation of a tax cut last week by saying there was an "emerging consensus" on the need to revive the economy.

Today he told GMTV: "We will make announcements very soon. Of course we will look at everything, but that's a matter for the Budget and pre-Budget report".

Mr Brown stressed that he had already cut income tax and families were getting an extra £120 in their pay packets this month and next.

The Prime Minister added: "What I am determined to do is to get all countries around the world trying to get their economies moving again and one way you can do that is by putting more money into the economy by tax cuts or by public spending rises. That's something that we've got to look at in the next few weeks."

In a Mansion House speech tonight Mr Brown is set to underline his belief that countries around the world could fight recession by using "fiscal stimulus" packages of fast-tracked public works and targeted tax cuts.

Chancellor Alistair Darling is expected to announce measures to help families in the pre-Budget report, but Downing Street and the Treasury were keen to play down speculation that taxes could be slashed by £15 billion.

The Treasury is working on a string of options, including possible rises in working tax credits — a move that would help Labour reach child poverty targets. There could be possible cuts in VAT, fuel duty and a new stamp duty "holiday".

The Bank of England will give the Tories further ammunition this week as it prepares to ditch its growth forecasts and confirm that Britain is entering a recession.

David Cameron put fears of unemployment at the heart of the Tories' election message today by declaring his party would not "stand by and do nothing" while joblessness rises.

Signalling that he will unveil tax cuts to help businesses keep people in work, the Conservative leader said that politicians had a "moral obligation" to help those whose jobs were threatened or lost through no fault of their own.

In a speech to a Conservative women's conference at Westminster, Mr Cameron said that the return of mass unemployment was a "recipe for social disaster", which threatened to deepen the problems of Mr Brown's "broken society".

New figures due this week are expected to show that the jobless total has soared above 1.8 million. Mr Cameron warned that prospects for jobs next year were also "grim".

Writing in the Evening Standard today, shadow chancellor George Osborne made clear he would oppose any "unfunded" government tax cuts paid for by soaring borrowing.

Tory sources suggested that the party will redraft the public finances to fund tax cuts. In one plan, they hope to "bank" savings from lower unemployment benefit in future years by using the cash now for tax relief.

Other plans could include national insurance holidays for firms and measures to make it easier to hire and retain staff.

Mr Cameron said: "The Conservative Party will not allow unemployment to ruin lives on a massive scale. We will not walk on by while people lose their jobs."

Despite signs of a Brown bounce in the Glenrothes vote, a new poll indicates that the Tories have held a 13-point lead. ICM put the Conservatives on 43, Labour on 30 and Liberal Democrats on 18.