Prime Minister David Cameron has poured cold water on hopes that tax cuts or a fresh round of money printing may be deployed to stimulate the economy on the eve of what are expected to be weak growth figures.
Pressure on the Government to announce a "plan B" for the economy will increase if the GDP figures show the UK undershooting earlier predictions of 0.5% growth over the three months to June.
Most City economists have trimmed their own forecasts back to 0.1% or 0.2%, with some even predicting negative growth. Business Secretary Vince Cable has suggested that the Bank of England could stimulate a sluggish economy with a further injection of money through so-called quantitative easing, while Chancellor George Osborne has hinted that he would like to cut taxes on business.
But Mr Cameron has insisted that there is no leeway for either fiscal stimulus through tax cuts or public spending increases, or monetary stimulus in the form of the Bank reducing interest rates or printing money.
Asked whether tax cuts or quantitative easing were options, the Prime Minister replied: "There's no country, really, that can afford another fiscal stimulus. They've all run out of money.
"There isn't some great monetary stimulus you can give when interest rates are as low as they are. The right step for an economy like ours is to get on top of your debt and your deficit and then make it a better place for businesses to grow and expand and employ people."
Speaking at a 10 Downing Street press conference with his Spanish counterpart Jose Luis Zapatero, Mr Cameron acknowledged that "our path back to growth is a difficult one and has already been a difficult one".
Labour have been calling for an economic "plan B", insisting that the Government's policy of using tax rises and spending cuts to eliminate the national deficit by the end of the Parliament risks choking off growth by cutting "too far and too fast".
They point to earlier Office for National Statistics figures showing a decline of 0.5% in the final quarter of 2010 and growth of 0.5% in the first three months of 2011 as proof that the economy has been "flatlining" since the coalition came to power.
Read More
Weak figures from the ONS would heap more pressure on the Chancellor to come up with an alternative strategy. But Mr Osborne insisted his tough deficit reduction plan has been "vindicated" by events.
