When It Happens Panel Get involved: send your photos, videos, news & views by texting 'OXFORD NEWS' to 80360 or email
Osborne warning on economic plans
Chancellor George Osborne has insisted that ditching his plan to restore the nation's finances could leave the UK facing an economic disaster like Cyprus.
The bleak assessment came as Mr Osborne rejected calls for a change in approach ahead of Wednesday's Budget, saying there was no "miracle cure" to the country's troubles.
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 BBC1's Andrew Marr Show: "That is why in Britain we have got to retain the confidence of world markets."
The Cypriot parliament is set to consider a European Union and International Monetary Fund bailout, with the possibility of a levy on bank deposits of up to 10%.
Mr Osborne, who has promised to protect British military personnel and Government personnel from the levy, added: "It is an extraordinary situation. I remember coming on this show a couple of years ago and we were talking about Greece then. Since then we have had Ireland and Portugal, problems in Spain, problems in Italy, now in Cyprus.
"Anyone who thinks Britain is alone in having these challenges should look on their TV screens, look at tonight's news and realise that it's a very tough economic situation out there. Unless we in Britain front up to our own problems, the problems in our banking system, the problems that we are borrowing so much money, the problems that actually our businesses need more help to create jobs. If we don't do those things then the difficult economic situation in Britain will get very much worse."
The Chancellor acknowledged his austerity measures were "difficult" and the efforts to rebalance and repair the economy was "painstaking work". "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. 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."
Liberal Democrat Business Secretary Vince Cable has suggested that borrowing more to fund capital spending could boost the economy. Mr Osborne said: "I agree that we need to spend more on capital, which is why I had taken the decision in December to increase the spending on capital - but paid for. In the end this country has got to pay its way, we can't just keep on thinking the answer to our problem is more borrowing. You can't get out of a debt crisis by borrowing more and more."
Shadow chancellor Ed Balls, appearing on the same programme, called for a stimulus package funded by increased borrowing. "Vince Cable, the International Monetary Fund, myself, many others are all saying unless you get the economy moving, unless you get some growth back, the deficit will stay high. Whereas if you act now with some stimulus to kickstart the economy, that's the way to get growth moving."
He accused Mr Osborne and Prime Minister David Cameron of refusing to consider a change in approach because of the political fallout. "The only reason why they won't now change course is to avoid their own political humiliation. That is no reason to stick to a failing plan. Stimulus now, kickstart the economy, get growth moving, that's the only way to get the deficit down." He added it was the "economics of the lunatic farm" to call for more spending cuts and tax rises when those were the policies which had choked off the recovery.