The Government is doing everything it can to drive growth in the UK economy, the Prime Minister has said.

David Cameron said the Government planned to invest in the "industries of the future" such as aerospace, pharmaceuticals and green energy while at the same time encouraging growth beyond the South East of England to balance the economy.

He said the coalition's "tough fiscal action" to cut the budget deficit did not mean the Government could not have a strategy to promote growth.

The Government wants to reform planning laws to make it easier for entrepreneurs to expand and "lay out the red carpet" for start-up businesses, he said.

Speaking to business leaders in Manchester, Mr Cameron added that it was necessary to tax spending with the VAT increase as part of a plan to share the burden with public sector cuts.

He said: "Make no mistake - this Government is doing everything we possibly can to drive growth and make the next decade the most dynamic and entrepreneurial in our history."