HORSHAM, England (Reuters) - British opposition leader David Cameron urged the Labour government yesterday to slash the budget deficit or risk damaging investor confidence, pushing up interest rates and prolonging the economic downturn.

An aide to the Conservative leadership said the party's own plans — if it wins an election due by mid-2010 — to act quickly to bring down borrowing would allow interest rates to stay lower for longer to support growth.

Labour finance minister Alistair Darling will lay out his latest tax, spending and borrowing plans in the pre-budget report today. He is expected to give more detail on how he intends to halve the budget deficit over four years.

Bank of England Governor Mervyn King has warned that a credible plan is needed to cut the deficit, which is set to top 12 percent of gross domestic product this year. Many analysts say not enough has been done to win over investor confidence.

The Conservatives think Labour's plans are not tough enough and want promises for harsher cuts as soon as next year.

"You can't solve the problem of the deficit straight away but what there is an absence of is a credible plan. A credible plan is not only about tomorrow but it's also about what you start to do today," Conservative leader Cameron told a business audience in sourthern England.

"I don't think anyone is going to be impressed with a plan that doesn't have at least some early action in it. There is also a risk that because the deficit is so big ... it also saps confidence. It's like a dark cloud hanging over the country."

Darling said on Monday he would rather withdraw stimulus a little too late than a little too early to safeguard recovery.

Britain has endured its longest recession on record over the last year and a half and is the only major economy still contracting in the third quarter. It is expected to return to growth at the end of the year.

Cameron said that, if it wins power next year, his party would hold an emergency budget outlining a timetable of supportive measures, such as lower corporation taxes, as well as measures to cut the deficit faster than Labour plans to.

Most opinion polls suggest the Conservatives will form the next government after an election which must be called by June 2010, replacing a Labour party in power since 1997 and putting pressure on the opposition to flesh out how it might govern.

"We've got to do two things at the same time," Cameron said. "You have got to have some pro-growth policies. We would have an emergency budget with pro-growth measures but at the same time pro-growth and anti-deficit — they go together."

"Those two things can clear the path for future growth but if we don't do them then there are dangers ... that's the risk of the double dip and that's what could push interest rates up."

Some economists have questioned how growth could be engineered while slashing spending, and Darling has said cutting the deficit too quickly would be "ruinous" for the economy.

Conservative insiders say the BoE could counter the constraint put on the economy by any sharp fiscal tightening.

"There is a growing consensus that doing more to get to grips with the deficit will allow interest rates to stay lower for longer to support the recovery," an aide to the Conservative leadership told Reuters.

That coupled with a credible timetable for more sustainable public finances and lower taxation — especially for businesses — would give Britain a path to sustainable growth, aides say.

Cameron also said he wanted to get corporate taxes down to make Britain the most attractive place in Europe to do business.

"If you can cut it and set out a long term goal for getting it down, it puts a sign up on the British economy saying this is the place and the government that wants to make Britain the most competitive tax regime in Europe," he said.