GEORGE Osborne was yesterday urged by Labour to implement "significant tax cuts" in next month's Budget.

Shadow Chancellor Ed Balls suggested the Government could cut income tax by 3p, raise the income tax threshold to above £10,000 or increase tax credits for working people.

He said it would be "fairer and quicker" to cut VAT but added that the Chancellor would be unwilling to admit his "mistake" in raising the sales tax to 20%.

Mr Balls said: "We need some stimulus into our economy to get the economy moving. To get growth and jobs back is the only way to get the deficit down."

His intervention comes after credit ratings agency Moody's last week put Britain on negative outlook, warning that it could lose its AAA standard.

Unemployment figures were also up again, with youth joblessness reaching another record high. Inflation, while falling in the latest update, continues to outstrip wages.

Earlier, Mr Balls also attacked the 2.5% rise in VAT.

He said in a newspaper article it was "absurd" to suggest the £12 billion cost of cutting VAT was not affordable when borrowing was £158 billion higher than planned due to slow growth and high unemployment.