Chancellor Warns Of 'More Tough Choices'

George Osborne has warned the country of "more tough choices" and says there are no "miracle cures" for the UK economy, as he prepares to deliver Wednesday's Budget.

The Chancellor is under mounting pressure to change course and kick start growth as the UK faces an increased risk of falling into a triple-dip recession.

An opinion poll suggests most voters - including more than a quarter of Conservative supporters - think his policies are failing.

But Mr Osborne dismissed calls for extra borrowing to cut taxes or finance a "spending spree" and insisted that abandoning his austerity programme would be a "disaster".

He warned the UK could end up facing an economic disaster like Cyprus if he was forced to change course.

The Chancellor said the crisis in Cyprus was an example of "what happens if you don't show the world you can pay your way".

He told the BBC's Andrew Marr Show: "That is why in Britain we have got to retain the confidence of world markets."

Mr Osborne acknowledged his austerity measures were "difficult" and the efforts to rebalance and repair the economy was "painstaking work".

But he said that "unless we in Britain front up to our own problems ... then the difficult economic situation in Britain will get very much worse".

The Chancellor will deliver his Budget on Wednesday

"There is no easy answer to Britain's problems, there is no miracle cure because if there was a miracle cure it would have been deployed," he said.

"It's just a lot of hard work of dealing with Britain's debts, helping businesses create jobs, helping families who want to work hard and get on."

Writing in The Sun on Sunday, Mr Osborne hinted he would do more to help homebuyers, business start-ups, apprentices and people saving for retirement.

Helping create jobs would mean "cutting tax rates and red tape, backing scientific advance, building new roads and broadband" and making the UK an attractive investment option, he said.

However he warned of "more tough choices" to be made on further slashing public spending from 2015 - with the scale of the squeeze to be unveiled in his statement.

"It won't be easy," he warned, amid rows between ministers over where the axe should fall.

His comments came as a report revealed families have cut back on spending by more than £3,000 a year since the start of the credit crunch.

Consumer watchdog Which? found the cut in discretionary spending's opening up a £136bn black hole in the economy over the last five years.

Hopes the economy could grow in this quarter and thus avoid returning to recession were dealt a blow this week by a 1.5% fall in manufacturing output in January.

Former cabinet minister Liam Fox is leading Tory calls for a change of course - suggesting Corporation Tax be reduced to zero and far bigger cuts to public spending, notably welfare.

Other prominent backbench demands include cancelling a fuel duty rise due in the autumn and scrapping the beer duty escalator that automatically ups the price of a pint.

Mr Osborne is tipped to announce extra investment in housebuilding and road projects - called for by leading business groups - and help for people to buy homes.

But he will not abandon "Plan A" by increasing borrowing to fund it - a move being mooted within the coalition by Liberal Democrat Business Secretary Vince Cable.

Shadow chancellor Ed Balls said he would welcome extra borrowing to fund a cut in the basic rate of income tax to put more money into people's pockets.

But Mr Osborne hit back: "I think the British people know there are no easy answers in today's world. They aren't fooled by the miracle cures peddled by the same snake oil politicians who got us into this mess.

"Labour's answer to Britain's borrowing problems is to borrow even more - that simply doesn't make sense. If there were easy options and miracle cures then of course I would take them, but sadly there aren't."

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