Gordon Brown has defended his spending plans after the Bank of England governor expressed concern that government borrowing is set to remain in the red.

Implicitly criticising Mervyn King's intervention, the chancellor said it was for him to decide on the policies required to manage the economy.

Addressing a City audience at the Mansion House on Wednesday, King said that the public sector finances had "tilted more and more towards the spending side".

He added that "the projected rise in tax revenues over the next three years will, I am assured, allow the scales to swing back to what is known in the trade as a sustainable fiscal position".

"That is important because the improvement in the fiscal stance in recent years has been a key element in achieving macroeconomic
stability," King added.

Brown, who heard the comments first hand at the Mansion House, defended his handling of the economy.

"We have now got a more stable economy and what I said last night is that all the decisions I make and indeed the Bank of England make will be determined on keeping that stability," he told GMTV on Thursday.

"What he [King] really did say was that borrowing had to rise because we have had a recession and now it's coming down as a result of the changes that are happening in the British economy."

Brown also insisted he would maintain "basic stability" in the economy.

"It's got to be based on low inflation. It's for the Bank to set the interest rates, it is for me to ensure that we have policies that keep inflation generally low in our economy," he said.

The latest Treasury forecast suggests that net borrowing this year will stand at £33 billion.

Over future years it is expected to decline gradually, but will still stand at "23 billion by 2008/09.