Chancellor Gordon Brown is preparing to curb public spending in an attempt to shore up public finances, the Sunday Times has reported.
Mr Brown has presided over mounting deficits
According to the newspaper, a leaked Treasury letter suggested that Mr Brown and Prime Minister Tony Blair had agreed to halt the growth of expenditure.
The letter reportedly warned ministers they could expect no more money over the next few years, and that some departments might have to make cuts.
The newspaper tied the letter in with an upcoming meeting, at which business leaders are likely to tell Mr Blair that they are dissatisfied with economic and fiscal policy.
Under the Labour government, growing spending and sluggish economic growth have produced increasing budget deficits.
Mr Brown has forecast a deficit of £27bn ($43bn) for the current year, but economists think this could be exceeded by up to £10bn.
This could put Britain for the first time in breach of eurozone fiscal criteria, which - although not binding for the UK - would be embarrassing for the government and worrying for investors.
Meanwhile, business leaders are becoming more vocal in their criticism of the government.
This week, a group of influential chairmen of UK companies are scheduled to meet Mr Blair.
Officially, the meeting is focused on international trade.
But the Sunday Times said that the chairmen are likely to demand a shake-up in the way the government manages the economy, including a reduction in red tape, and tighter control over public finances.