Osborne Warns Of 'Choppier' Recovery

The Chancellor has criticised "unrealistic assumptions" of a return to business as usual for the UK economy, during a speech to City figures.

George Osborne said the "overhang of debt" means recoveries from financial crises are "slower and choppier" than from other kinds of recession.

His speech to Lloyd's of London is likely to be seen as an acknowledgment there could be further bumps in the road.

He said anyone who suspected this recession would be different from previous examples needs to fundamentally re-examine their analysis.

Mr Osborne hinted there will be no "continuation of forgiving financial market conditions".

The Chancellor continued: "We understood right from the beginning that the world of the boom years had changed beyond recognition.

"We identified the problems and the risks - an overleveraged economy, an unsustainable budget deficit and a broken model of growth.

"We warned repeatedly that the recovery would be choppy."

He argued his plan is "flexible enough to withstand shocks along the way".

"It is the rock of stability upon which any sustainable recovery depends and we will hold to it," he said.

"We had an emergency budget last summer on our own terms - not this summer on the market's terms - unlike so many other countries. We have been ahead of the curve.

"We have been a safe haven in the sovereign debt storm. We have delivered record low interest rates for families, businesses and taxpayers.

"We are not immune from what happens on our doorstep. But we can remain masters of our own destiny," he added.

Labour criticised the Chancellor last time he claimed the UK was any kind of "safe haven". It prompted shadow chancellor Ed Balls to accuse him of "dangerous complacency".

Hours before the speech, Mr Osborne clashed with Mr Balls in the Commons.

The shadow chancellor called for a bonus tax to be added to the bank levy to be spent on creating jobs for young people.

"Unemployment is rising (and) the stock market is plummeting," he said.

But Mr Osborne hit back, highlighting Mr Balls' own time at the Treasury: "He was the City minister when the City exploded."

He added: "As for downgraded numbers, the fastest falling numbers around here are his economic credibility numbers."