Business groups want extra help for companies struggling to raise money, a more radical infrastructure plan, a National Insurance holiday for employers and assistance with local business rates.
Small business organisations also called for political parties to work together in a “grand national bargain” to stop Westminster disagreements undermining the economy.
John Longworth, the director-general of the British Chambers of Commerce, said that the Treasury’s efforts so far were “on way too small a scale” and had “not been sufficiently thought-through”.
Mr Cable said: “Budget discipline is a necessary but not a sufficient condition for recovery. We clearly do need a strong growth strategy. That is partly about demand, and that is where the Bank of England’s aggressive policies are central.
“But we also need policies to stimulate long-term growth, which is the kind of things that the Government has produced over the last few days, with the funding-for-lending scheme, which is designed to inject some life into the banking system, and the policies for supporting major infrastructure projects.”
He added: “That’s building on a lot of things that have already happened, and no doubt there will have to be more. But that is the package, that is the overall structure of what we are trying to achieve. I call it my Plan A-plus, which means accepting that we have the necessity for budget discipline but that that has to be augmented by growth policies.”
Mr Cable sought to distance himself from comments by Lord Oakeshott, a Liberal Democrat peer who is close to him.
The peer called for Mr Osborne to lose his job as Chancellor, saying: “I do think that George Osborne has no business experience.
“He has never worked outside politics and he is doing surprisingly well for a chancellor on work experience.
“Really, in a torrid time like this, we do need the absolutely best people available. Any business failing its key objective like this would change its strategy or its management or probably both.
“Britain should do the same now with a bold Plan A-plus. We need our A team at the Treasury.”
Downing Street sources have repeatedly stressed that Mr Osborne’s position is secure in the reshuffle expected in the autumn and Danny Alexander, the Chief Secretary to the Treasury, gave a series of broadcast interviews defending the Chancellor.
David Cameron is becoming increasingly frustrated at the failure of European leaders to tackle the crisis in the single currency.
Michael Fallon, the deputy Conservative chairman, who is close to Downing Street, said the figures were “disappointing but not a surprise”. “This is an economy in intensive care,” he said. “We’ve had the biggest ever deficit anybody’s seen since the Second World War four years ago, we’ve had the biggest banking bust anyone’s ever seen. It will take a while, more than a year or two, to get the economy back on its feet.”
Mr Osborne insisted that the Government was maintaining a “relentless focus” on boosting growth. “We know the economy has deep-rooted problems, and the disappointing figures are further confirmation of that,” he said. “We’ve got to deal with the debts we’ve built up in this country over many years.”
The Prime Minister added: “It’s vitally important we redouble all our efforts to get on top of our debts, deal with our deficit, get our economy moving.”
Labour said that the Chancellor should stop “peddling the line” that there was no alternative to his austerity drive and urged him to admit that it had failed.
Senior Whitehall figures are privately expressing alarm over the accuracy of the official data. Unemployment has fallen this year and other economic indicators are more positive, yet the GDP figures show the country in recession.
In an interview with The Daily Telegraph last week, the Prime Minister indicated that the austerity programme might have to extend beyond 2017 – balancing the budget has already been pushed back from 2015 – because of the continuing economic problems.
Mr Cable admitted that the prolonged recession would deepen the deficit. “Obviously the Government will be looking at this in the autumn when we have a better picture of what this means for public finance,” he told ITV News.
A larger deficit would force ministers to make deeper cuts or extend austerity for longer. The Business Secretary hinted that the Coalition could announce a further extension, saying recovery would require ministers to show “flexibility in the way we apply our fiscal rules”.
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