GEORGE Osborne has insisted he is not panicking on the economy as he braces himself to see tomorrow if his controversial economic policy has resulted in a triple-dip recession.

On the eve of the latest set of growth figures, the Chancellor is due today to announce that the Coalition's £80 billion lending scheme is to be extended.

The Treasury and Bank of England are expected to extend their Funding for Lending Scheme (FLS) specifically to target those banks which lend to small firms, a sector currently starved of credit.

The FLS was launched last summer to offer banks and building societies funding at low interest rates on condition they passed on the cash to households and businesses. Yet while it has been helping boost the home loans sector, it has failed to make an impact on small businesses.

Last week, bank figures showed net lending to companies slumped by £4.8bn in the three months to February, declining by £2.8bn in February alone.

Policymakers at the Bank recently said they saw merit in boosting the FLS while Mr Osborne signalled in last month's Budget that the Treasury and Bank were toying with extensions to the scheme. Nick Clegg, the Deputy Prime Minister, is said to want to put the FLS "on steroids".

It comes as Britain's finances remain under pressure with borrowing falling only marginally in the last financial year. Public sector net borrowing in the 12 months to the end of March was £120.6bn – £300m lower than the previous year, the Office for National Statistics said. The Treasury said the reduction showed the Government was "fixing" economic problems but economist Howard Archer said the pace of reduction "makes a snail look fast".