8:52pm UK, Sunday March 06, 2011
Firms would go bust, jobs would be lost and the financial markets would panic if the Government stopped its deficit reduction plans, the Chancellor has warned.
Speaking to Sky News, George Osborne defended his economic strategy ahead of the budget later this month and said there was no plan B.
He said changing course was not an option after the Government's strategy had brought stability to the UK and enabled it to keep interest rates low.
The coalition has been criticised by Labour for its spending cuts in public services, saying they are too fast and too deep.
But Mr Osborne said if he abandoned his plan "there would be panic the following day".
"Markets would crash, the credit rating would be downgraded, interest rates would rocket for families and businesses."
He added that "investment would be cancelled, business would go bust, jobs would be lost."
Former chancellor Alistair DarlingIf you take £100bn out of the economy over the next four years, you risk derailing the economy.
Mr Osborne admitted that all families were being squeezed by the high price of food and petrol.
He said: "I hear what people are saying to me and am aware of the challenge. Fuel prices have clearly gone up considerably recently."
Mr Osborne said in his next budget he wants "to unleash the forces of enterprise and aspiration".
He said the budget package would include a series of measures to boost growth.
The former chancellor Alistair Darling told Sky News it makes sense to put off the fuel duty rise but he believed Mr Osborne could have done it in the last budget in the summer.
He also criticised the Government's spending cuts, saying: "If you take £100bn out of the economy over the next four years, you risk derailing the economy."
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