Economy: Gordon Brown yesterday pledged to spend his way out of the looming recession by rolling out a strategy of higher borrowing to shore up the economy as the �responsible� thing to do.

Gordon Brown yesterday pledged to spend his way out of the looming recession by rolling out a strategy of higher borrowing to shore up the economy as the "responsible" thing to do.

With Alistair Darling preparing to consign to the bin Mr Brown's famous fiscal rules on spending - not to borrow more than 40% of GDP over an economic cycle - the Prime Minister laid the ground for the Chancellor.

Mr Brown told a business audience at Imperial College, London, yesterday that he would use fiscal policy to kick-start the economy.

Despite criticisms from some leading economists, Mr Brown insisted Britain had to make the necessary long-term investments to benefit from the "new global age".

His speech came on a day that the London stockmarket plunged by more than 5% and sterling weakened to $1.54 as the turmoil in the world's financial markets continued.

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

"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.

While insisting it was up to the Bank of England to decide on rate changes, he added: "I think you saw from what the governor (Mervyn King) said a few days ago that he feels the real threat we face now is the impact of the credit crunch on the economy and growth."

Demands for a further cut in the current base rate of 4.5% have been building in recent days, with some predictions that a zero rate would be needed to aid recovery.

But there have also been calls from senior economists, and from the Liberal Democrats, for tax cuts. Downing Street later announced that the Prime Minister would be travelling to French President Nicolas Sarkozy's private residence outside Paris today for talks on the global economic situation.

German Chancellor Angela Merkel will then hold discussions with Mr Brown in London on Thursday. The European Council will discuss the downturn on November 7, days before an international summit in the US on November 15.

Meanwhile, Mr Darling is expected to make use of the Chancellor's annual Mais lecture tomorrow - rescheduled from earlier this month when he was involved in the historic government rescue plan for ailing banks - to scrap the rules on borrowing introduced by Mr Brown as Chancellor in 1997.

Mr Darling's forecasts of £43bn of borrowing this year are in tatters and some experts have warned that debt could balloon to £120bn in three years. Public debt hit a record £37.6bn between April and September - higher than the whole of the previous year - and the extent to which the government is prepared to borrow further is expected to be laid out in the forthcoming Pre-Budget Report due in late November.

The Conservatives accused Mr Brown of pulling a gigantic con trick, claiming that he was trying to cover up for mistakes he made earlier. David Cameron, the Conservative leader, said Mr Brown was not a man with plan but a man with an overdraft.

"This is not borrowing to get out of a recession, this borrowing is because of all the mistakes he made even before we got to the recession," said Mr Cameron. "He is not planning to increase spending in any meaningful way other than, tragically, on the amount of unemployment there is going to be."