Mr Brown, who ran the Treasury from 1997 before becoming Prime Minister nearly a year ago, was said to have followed "excessively loose" financial policies that saw government spending increase during the good times, with little being set aside for more difficult times.

Britain now faces a struggle to balance its books and keep the national debt below 40 per cent of the value of the economy – Mr Brown's so-called sustainable investment rule – said a gloomy assessment from the Organisation for Economic Co-operation and Development (OECD).

It also warned the Bank of England should not cut interest rates in the short term, as rising inflation had to be kept under control. Inflation currently stands at 3 per cent – the government target is 2 per cent – and experts fear it could hit 4 per cent by the end of the year.

However, cuts in borrowing rates of 0.75 points may be needed over the first six months of next year, the OECD said.

The Bank's monetary policy committee is expected to announce today that the basic interest rate is being held at 5 per cent.

The OECD, giving its six-monthly economic outlook, said the UK was heading for a "significant downswing", as it slashed its growth predictions for this year and next year.

It said the UK economy would grow by 1.8 per cent this year – compared with its original 2 per cent prediction – and 1.4 per cent next year, down from an earlier 2.4 per cent estimate.

The OECD said government spending would have to be pared back if debt was to remain below the 40 per cent target. Its report said: "While ongoing economic weakness in 2009 would argue against fiscal restraint, the government's options have been limited by excessively loose fiscal policy in past years when economic growth was strong."

Philip Hammond, the Tory shadow chief secretary to the Treasury, said: "This worrying report confirms what the Conservative Party has been saying all along – that Gordon Brown failed to fix the roof when the sun was shining. He borrowed in a boom, leaving us with the largest budget deficit of any industrial economy. Now we are all paying the price for his economic mismanagement, with Britain less well prepared than any of its neighbours to weather an economic slowdown."

Vince Cable, the Liberal Democrats' Treasury spokesman, said: "This is truly awful news for the government. It confirms all the worst fears about a deteriorating economy, and the lack of any freedom of manoeuvre due to lax control of government spending on Gordon Brown's watch."

But Alistair Darling, the Chancellor, denied the government was at risk of breaching its economic rules – and said the OECD report acknowledged the underlying strength of the UK economy at a time of global uncertainty. He said: "Whilst, like every other country, we are facing very turbulent times, it remarks on the resilience of our economy, which I think is a tribute to what we have been able to do over the last ten years."