Britain would be in "financial turmoil" if the Coalition abandoned its deficit reduction plan, and has no alternative but to follow it through, George Osborne has warned.
The Chancellor said no politician likes cutting spending and raising taxes, but the measures are necessary to clear up the "mess" that the previous Labour government left.
His comments come as his Labour counterpart Ed Balls called for a new economic strategy and described the relentless tax hikes and budget cuts as an "irresponsible and dangerous" political strategy.
Mr Osborne, who has been discussing financial issues at the World Economic Forum in Davos, Switzerland, said: "If on Monday I went to Parliament and got up in the dispatch box in the House of Common and said I am abandoning the deficit reduction plan that Britain set out last year, what do you think the reaction would be?
"Within minutes Britain would be in financial turmoil. I am not prepared to let that happen. It requires tough, difficult decisions."
Mr Osborne was last week forced to defend the Government's tough austerity measures after statistics showed that the UK economy unexpectedly shrank in the fourth quarter.
The severe weather last month triggered a drop in demand for the key services sector, which makes up more than 75 per cent of the economy, sparking a shock 0.5 per cent plunge in gross domestic product between October and December.
Shadow chancellor Mr Balls described the figures as "shocking". He said: "While George Osborne insists it was the Big Freeze in December that caused the contraction, it is the impending Big Squeeze on family budgets and public services that is driving the collapse in confidence and holding back investment."
Mr Balls criticised the Chancellor's plan to clear the deficit by 2015, claiming there was "an economically more credible alternative to what this Conservative-led Government is doing".
