The shadow chancellor Ed Balls has once again called for a temporary cut in the VAT rate, saying it will give the economy a much-needed boost.

Mr Balls told Today presenter James Naughtie that he was "more worried about Britain, Europe and America than a year ago" and that economies around the world now needed to go to a "Plan B" to create growth and jobs.

He again accused chancellor George Osborne of trying to cut the deficit too quickly.

"Our coalition has decided the cornerstone is sticking to a deficit reduction plan which isn't working, has flat-lined our economy. Our problem is we can't argue for sanity in the eurozone, in America, if we are sticking to a failing policy in Britain."

And he dismissed the idea of ending the 50p top rate of tax, adding: "Do we really think, when we need to get our economy moving... the first priority is... to only cut incomes over £150,000?"

Mr Balls' comments come as new Bank of England figures have revealed the extent to which borrowers have benefited from two and a half years of low interest rates, while savers have lost out.

It is estimated that savers are £43bn worse off than they would have been if they had earned more interest on their investments. But those paying mortgages have seen £51bn trimmed from their bills.

In a speech earlier this week, the chancellor told an audience in the City that he will not change his deficit reduction plan.

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