In his first speech on the economy since the Budget, Gordon Brown will today warn public sector unions that ministers will not accept inflationary pay settlements.

It was announced in the Budget that the government plans to axe more than 40,000 civil service jobs.

"There must be no return to the bad old days of pay irresponsibility in the private sector and we will tolerate no irresponsibility in the public sector," the chancellor will tell the British Chambers of Commerce.

His speech comes a day after the latest figures showed a fall in inflation to 1.1 per cent.

"Civil service unions should also know that not only will we proceed with the 40,500 job reductions, but there will be no going back to the old days of inflationary pay deals that would put hard won economic gains in jobs, prosperity and stability at risk," Brown will say.