LONDON - Britain faces a concoction of deteriorating global economic conditions that leaves its cash-strapped government little room for policy error, Liberal Democrat Deputy Prime Minister Nick Clegg will say on Wednesday.

Clegg will say in a speech in London that, while the Conservative-led coalition government will "stay firm" on reducing Britain's record budget deficit, more can be done to encourage economic growth as government spending is slashed.

There are concerns at the top on both sides of the coalition about the lack of growth in Britain's economy this year, with opposition politicians and analysts blaming the lack of activity in part on austerity.

"The situation has changed dramatically, worse even than just six months ago," Clegg will say, according to extracts from his speech.  

"A huge rise in oil and food prices. A slowdown in overseas markets. Continued turmoil in the euro zone. Ongoing uncertainty in the US"

A much-vaunted, private sector-driven recovery has yet to materialise in Britain, lending conditions remain constrained, and there is no room within fiscal policy to fund any immediate boost to growth.

The Bank of England has come under increasing pressure to come to the rescue and fund another round of asset purchases, with the government arguing that monetary levers are the most effective weapon to boost growth.

While there is little chance that the government will abandon or even alter its deficit plans to give the economy breathing space, ministers are asking officials to find ways of boosting long-term growth through supply side measures.

Clegg will say 40 infrastructure projects -- an area notorious for delays and budget over-runs in Britain -- will be given priority status to ensure they are delivered swiftly and on budget.

They include rolling out high speed broadband across the country, improving the efficiency of the electricity grid and improving rail and road links.

"The reality we face is stark; there is now little margin for error," Clegg will say. "But that does not mean we are helpless. It does not mean we intend to sit on our hands while the economy falters.

"We can do more, we are doing more, we will do more."