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David Cameron says the Tories want to change the tax system to help reduce unemployment.

The Conservative Party leader told the Conservative Women's Conference a government led by him would make it easier for businesses to keep and take on workers.

Mr Cameron said the best and most immediate way of helping people through the economic downturn was to "leave people with more of their own money through the tax system."

He said he and shadow chancellor George Osborne would be setting out their proposals "this week".

Meanwhile, the PrimeMinister has said tax cuts could be used to get the UK out of recession.

Gordon Brown hinted tax reductions could be on the way for families in the next few days.

"Of course we are going to look at everything, but that is a matter for the budget and the pre-budget report. We have a pre-budget report in the next few days actually.

"We are looking at everything we can to help people and we will make announcements very soon. You will see things happening in the next few weeks," he told GMTV.

"What I am determined to do is to get all countries around the world trying to get their economies moving again.

"And one way you can do that is by putting more money into the economy by tax cuts or by public spending rises," he said.

A group of economists says that despite the big borrowing involved, tax must be reduced.

Chancellor Alistair Darling should consider a temporary cut in VAT from 17.5% to 12%, according to the Centre for Economics and Business Research (CEBR).

A reduction until the end of 2009 would cost £24bn but the net impact would be much less - possibly even nothing - if it stopped the recession from intensifying, the research group claimed.

Meanwhile, research from the high street says consumer confidence has fallen to a new low as people worry whether they will be in work next year.

A report by the British Retail Consortium says 84% of people think Britain is already in a recession.

Only 14% think the country will get out of it within a year.

A separate report by the CBI shows a huge fall in jobs at small to medium sized manufacturers, with employment prospects expected to get worse in the next few months.

Tonight, the Prime Minister will use his foreign policy speech at the Lord Mayor of London's banquet at Guildhall to say the world's biggest economies must agree on a new global financial system, featuring a reformed IMF which will act as a international early-warning system for financial problems.

Following last month's co-ordinated international moves to refinance the banks and slash interest rates, Mr Brown will say that it offers "the chance to forge a new multilateralism that is both hard-headed and progressive".