Full coverage of the Budget

Gordon Brown insisted today that he would not lose his focus on the deepening UK recession because of political “diversions”, as the country prepares for the first recessionary Budget since 1991.

The Prime Minister is thought to be referring to his well-publicised problems with Damian McBride, the special adviser who resigned this month after a leaked e-mail implied that he was planning a smear campaign targeting leading members of the Conservative Party.

Mr Brown was speaking at the launch of a plan to invest in the UK’s economic and industrial future, which includes a focus on low-carbon technology, manufacturing, construction and healthcare.

The Budget, to be delivered on Wednesday, is set to cut public sector spending by £15 billion over the next five years.

Alistair Darling, the Chancellor, will also announce a £500 million “green stimulus” to the economy, supporting wind farms and other alternative energy projects.

Mr Brown said today: “All the other diversions in politics and all the problems that happen, and some of them are difficult and some of them are very worrying and annoying — this is the major problem that every government faces around the world: how to rebuild the financial system so it can serve industry and business as well as ordinary families and homeowners again.”

Lord Mandelson, the Business Secretary, said: “What they [the public] want to see is a Government that is focusing on its day job and not allowing itself to be distracted by every media squall that is sent our way.”

They were speaking at the launch of the policy statement “Building Britain’s Future — New Industry, New Jobs”, which identifies key areas for investment to restore growth to the British economy.

Lord Mandelson said the plan would mark “concerted action to back businesses” by clearing obstacles in the path of businesses or correcting market failure.

Mr Darling's second Budget is understood to include £200 million to fund more wind turbines, hydroelectric power and other renewable energy technologies, as well as tax incentives for North Sea oil companies to explore old or inaccessible fields.

There should also be an announcement about the much-discussed German-style "scrappage" scheme under which motorists would be given an incentive of up to £2,000 to scrap their old car and buy a new one.

He is expected to announce moves to kickstart the housing market by offering to underwrite £50 billion worth of new mortgage-backed assets and £2 billion to help the unemployed.

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