A MAJORITY of voters believe that Gordon Brown has weakened the economy by putting up taxes too much, a new poll for The Times shows today as he prepares to defend his record and deliver an upbeat assessment of Britain’s prospects.

The Populus survey gives an unexpected jolt to Mr Brown’s reputation for prudence as he unveils the Pre-Budget Report.

The Chancellor is also facing a row with Brussels by insisting that a big increase in public borrowing, expected to be announced this afternoon, does not breach European rules and is justified by the circumstances.

The new poll, undertaken last weekend, shows that three fifths of voters (59 per cent) believe that Mr Brown has weakened “our economy by putting up taxes too much and planning increases in spending that are more than we can afford, though public services have not improved”.

Just a third of the public (34 per cent) think Mr Brown has “taken prudent economic decisions that have strengthened our economy and enabled us to afford continuing increases in spending on public services”.

Opinion is polarised along party lines. While nearly three fifths of Labour voters re- gard Mr Brown as “prudent”, four fifths of Tories, and two thirds of Liberal Democrats, believe he has weakened the economy.

Worryingly for Mr Brown, nearly two thirds of swing or floating voters, who may change their minds before the next election, also think the Chancellor has weakened the economy. This group forms nearly two fifths of the electorate.

With borrowing forecast to rise to between £30 billion and £40 billion — above the European Union’s 3 per cent limit for borrowing as a share of national income — the Chancellor will try to pre-empt action by the European Commission.

Mr Brown is to write to Pedro Solbes, the European Economics Commissioner, saying that Britain is right to borrow this year and that he does not regard himself as having erred outside the rules of the Stability and Growth Pact, which governs the eurozone.

There is speculation in the City that the Commission may feel bound to investigate Britain as a way of restoring its credibility after its failure last week to take action against France and Germany for breaching the rules. Countries inside the eurozone are liable to massive fines for breaching the deficit. Because it is outside, Britain can only be admonished but such action would be embarrassing.

Mr Brown’s letter is expected to make plain that Britain’s overall fiscal position is strong and in line with a “sensible” interpretation of the Stability Pact which takes account of the economic cycle, levels of debt and public investment.

He is expected to emphasise that Britain’s overall level of debt is lower than other European countries’ and that the British deficit is much lower than that in France, Germany and the United States. He is likely to argue that the 3 per cent figure will be exceeded only this year, with borrowing returning to lower levels in the following years.

The Chancellor will blame lower-than-expected tax receipts and the War on Terror for the big rise in borrowing which was projected to be £27 billion this year. Today he is likely to announce a further £800 million for the special reserve set aside for Iraq — bringing the total of spending on the war on terrorism and Iraq to £6.3 billion.

Mr Brown is also expected to point to continuing economic growth and high levels of employment to argue that pessimistic warnings earlier in the year by Michael Howard, then the Shadow Chancellor, and by outside forecasters have been proved wrong.

The Populus poll shows that more men take a positive view of Mr Brown’s record than women. Voters become much more positive about the Chancellor’s record as they get older.

The poll also shows that Mr Howard already has a higher rating on the Populus leader index than Iain Duncan Smith, his predecessor, though he is still just behind Tony Blair and Charles Kennedy. This is mainly because of the favourable view of Tory supporters.

The Chancellor is also expected to signal his desire to boost the supply of affordable housing by giving a boost to the private rented housing sector. A report this morning by Kate Barker, a member of the Bank of England’s Monetary Policy Committee will propose moves towards a new type of property investment company, and propose tax breaks to back them. He will give general backing to the idea which could bring in big investment from institutional investors and private shareholders.

The Barker report is expected to conclude that Britain needs 250,000 new homes each year but is building far fewer than that. The report may lead eventually to a relaxation of planning laws which have stood in the way of development and contributed to sharply rising house prices. In the 1960s, 400,000 homes were built in Britain every year, but half were council houses. Local authority building has now all but disappeared, leaving a massive shortfall.

Populus interviewed a random sample of 1,006 adults aged over 18 by telephone between December 5 and 7. Interviews were conducted across the country and the results have been weighted to be representative of all adults.

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