Because of Nassau's high debt, Mr. Suozzi proposes to cut annual borrowing to $70 million, from $160 million.

He also called for building two more prisons, increasing aid to the homeless and to AIDS research, raising welfare recipients' housing allowance and reducing the state's annual short-term borrowing.

Government's annual borrowing will hit 8pc of national output next year.

It will now expand its annual borrowing from €55bn to €70bn , even though it has already seen a sharp rise in its "Watchlist" of problem loans.

In subsequent years he succeeded in bringing the budget into balance and in reducing the state's annual borrowing by 25 percent, or $1 billion.

In his pre-Budget report speech on Wednesday, Alistair Darling is expected to confirm annual borrowing will top £175bn.

The better-than-expected figure means George Osborne is still on course to meet his latest annual borrowing target.

During the Spending Review of 2000 Labour began to pursue a looser fiscal policy, and by 2002 annual borrowing had reached £20 billion.

Under a plan announced with much fanfare in the spring, the state is actually supposed to be reducing its annual borrowing by paying off its long-term deficit over the next 30 years.

The Treasury should begin to issue gold bonds, whose interest and principal would be payable in ounces of pure gold, for at least a small part of the Government's annual borrowings.