The shadow chancellor, Ed Balls, will seek to restore public trust in Labour's economic competence today, when he addresses the party's conference in Liverpool.

Mr Balls will say that a future Labour government would adopt strict new rules on public spending, to eradicate the budget deficit.

He will also set out a five-point plan to boost growth, including a temporary reduction in VAT, which he will challenge the government to implement without delay.

"This is the most dangerous time in the world economy in my lifetime," he told Today presenter James Naughtie.

"The eurozone is in crisis. America is in a very difficult place. It's not working in Britain too. The thing which worries me is that David Cameron, our Prime Minister, goes to these international meetings and says we must stick together and work together - what's he actually saying?

"They should be cutting debts and spending faster, more austerity - what he's trying in Britain, but it's clearly not working in Greece and Italy and America and Germany because growth is flat-lining. The issue is internationally and in Britain you've got to learn the lessons of history, not repeat the mistakes.

"David Cameron and George Osborne are stuck in a false consciousness about the economy and until they get out of that. I'm afraid every time they go the international meetings they come with the wrong prescription and offer the wrong kind of leadership."

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