Despite a massive rise in public sector debt, Prime Minister Gordon Brown has insisted that the Government will continue with plans to spend its way out of the looming recession.

According the the latest figures net borrowing hit a record £37.6 billion between April and September - higher than previous year's total.

The sharp increase left Chancellor Alistair Darling's forecasts of £43 billion of borrowing this year in tatters and led to warnings that debt could rise to £120 billion in three years.

Following the Prime Minister's comments, David Cameron warned that the country was entering the global economic downturn with "the highest government deficit in the industrialised world".

In exchanges with Mr Brown, the Tory leader pointed out that economic forecasts predict the total debt this year could hit £64 billion.

He said: "Isn't the £64 billion question this: why, when business and families need more help, has he left the cupboard so bare?."

The Prime Minister however insisted the public finances were in good shape and the Government could afford to borrow to finance a major programme of public works.

"It is because we cut the national debt over the last few years that we are able to do what is the right thing," he told the House.

He cited figures from the International Monetary Fund which put debt in Britain at 37.6% of national income, compared to 55.5% in France, 56.1% in Germany, 101.3% in Italy, 46.3% in the United States, and 94.3% in Japan.

However more recent figures for September, which include the liabilities of the nationalised Northern Rock, show that debt in the UK is now more than 5% higher than that figure at 43.4%.

The Tories meanwhile unveiled their own proposal to cut the rate of employers' National Insurance contributions by 1p for at least six months for firms with fewer than five employees.

The UK's finances have been hit as tax revenues fall and benefit spending rises as the economy hurtles towards recession.

Tax handouts to tackle the 10p tax row and kick-start the housing market have added to the burden.

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