Conservative MPs yesterday increased pressure on George Osborne to cut taxes even if it had to be paid for by extra borrowing.
In the first sign of Tory division over the government's economic plans, senior backbencher David Ruffley suggested some MPs wanted the Chancellor to take an axe to taxes even if it took the UK further into the red, according to the Daily Mail.
Treasury Chief Secretary Danny Alexander revealed ministers are to shift billions of pounds of unspent government cash into funding infrastructure projects in a bid to boost growth.
The growing unease came despite fresh signs of market support for the coalition's deficit reduction plans. Yesterday the UK's cost of borrowing fell below Germany's for the first time in two-and-a-half years.
Market interest rates for the UK government now stand at 2.21%, fractionally less than Germany's and less than a third of those faced by Italy and Spain.
The yield on UK government 10-year bonds fell to 2.16%, while the equivalent German costs rose to 2.21%, in a sign that investors have more faith in Britain's ability to cope with its debts.
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