The Bank of England warned the British government on Tuesday it cannot afford any more fiscal stimulus.
Prime Minister Gordon Brown hopes to persuade leaders attending the G20 summit in April to agree on ambitious new spending to lift the world economy out of recession.
But central bank governor Mervyn King told a House of Lords committee that Mr Brown had little scope to pour extra cash into the Britain's ailing economy.
Mr King was addressing the issue of inflation which has hit zero with the retail level for the first time since 1960 and was speaking ahead of the budget in April.
He warned Chancellor of the Exchequer Alastair Darling to keep spending under control.
The International Monetary Fund this week added to concerns about Britain's fiscal position, forecasting that the country is facing the biggest government deficit in the Western world.