Tony Blair used a Downing Street press conference yesterday to urge the British people to continue shopping and taking holidays in order to prevent the country falling into recession.

The prime minister's plea was in response to growing concerns that the loss of consumer confidence following the terrorist attacks in America will cause the first British recession for ten years. These urgings were matched by President Bush who yesterday said Americans should "get on the airlines, get about the business of America."

Following his press conference, the prime minister attended a special cabinet meeting where Gordon Brown told his colleagues that while the government would be able to go ahead with planned increases in public spending, particularly in health and education, to meet the costs of the war against terrorism he would have to be "vigilant" in other areas.

The Treasury is concerned that the costs of the anti-terrorist campaign could stretch the nations coffers at a time of economic uncertainty.