Nov. 9 (Bloomberg) -- U.K. Prime Minister Gordon Brown is facing increasing demands to lower taxes in coming months to cushion against a possible recession.

Labour Party lawmaker Frank Field said today that a reduction would help the poor, while the Center for Economics and Business Research called on the government to slash the sales tax. The opposition Conservatives are scheduled to detail new plans on tax in two days.

The push comes as Brown and Chancellor of the Exchequer Alistair Darling prepare an update this month or next on the government's tax and spending plans. Brown has said he's ready to increase borrowing to ward off recession after the U.K. economy contracted in the third quarter. Field said today Brown should give priority to tax cuts over spending.

``A package of emergency tax cuts'' would be the ``most effective way'' of increasing demand in the economy, Field wrote in today's Sunday Telegraph. ``Steering these cuts towards the poorest'' would ensure that most of the cash would be spent immediately, he said.

Field is a former welfare minister who earlier this year forced Brown to water-down plans to scrap the U.K.'s lowest band of income tax. Further tax cuts would also boost the prime minister's popularity, perhaps enabling him to call and win an election in the first half of 2009, the lawmaker said.

Brown's popularity ratings have improved in some polls in recent months and last week he won a special election to fill a parliamentary seat in Scotland, breaking a string of defeats earlier this year.

Poll Confidence

Labour is still trailing the Conservatives by 30 percent to 43 percent an ICM Ltd. poll for today's Telegraph showed. Yet 40 percent of the 1,005 voters interviewed said Brown is best placed to handle an economic crisis, compared with 38 percent for Conservative leader David Cameron. ICM conducted the poll Nov. 5 and 6. No margin of error was given.

``Any reductions in taxation have to be fully funded,'' Conservative lawmaker Liam Fox said on BBC television. ``That's a more responsible way to deal with the country's economic problems than simply maxing out the country's credit card.''

Britain had its biggest budget deficit since 1946 in the six months through September as tax receipts stagnated, and economists say the shortfall may reach 7 percent of gross domestic product over the next two years, more than double the 3 percent European Union limit.

Brown has vowed to allow borrowing to rise further to combat the downturn and is pushing partners in the European Union and the G-20 group of countries to do the same. Asked about tax cuts at a press conference in Brussels late Friday, he deferred comment to the government's pre-budget report, which is due in coming weeks.

`Work Together'

``We continue to look at how we can do what's best to make sure our economy can move forward as quickly as possible,'' he said. The next stage international action ``is to work together to make sure our monetary and fiscal policies can help.''

The Centre for Economics and Business Research, which studies economic policy, will say tomorrow that Brown should consider reducing Value Added Tax, or sales tax, to 12.5 percent from 17.5 percent. The move would cost the U.K. Treasury about 24 billion pounds ($38 billion), it estimated in a report.

To contact the reporters on this story: Mark Deen in London at markdeen@bloomberg.net

Last Updated: November 9, 2008 10:22 EST