Gordon Brown will use next week's Budget to explain how a third term Labour government would spend the £35bn of cuts pledged by the Conservatives.

The FT says the chancellor will insist the spending is needed to safeguard Britain against the economic challenges posed by the rise of Indian and Chinese economies.

Brown is reported to believe that Oliver Letwin's plans to reduce government spending are the Tories' "Achilles heel".

Gordon Brown also expects to raise more than £4bn in 2006-07 from closing tax loopholes and reducing fraud.

More anti-avoidance measures are expected next week, says the FT.