Osborne denies he exaggerated crisis to justify huge cuts

Giving evidence to the Commons Treasury Committee, the Chancellor insisted that he had been forced to take drastic action to take the country out of the "financial danger zone".

However, he was upbraided by the committee chairman, Conservative Andrew Tyrie, who said his claim that Britain had been "on the brink of bankruptcy" was "a bit over the top".

Mr Tyrie questioned Mr Osborne's claims that his emergency Budget last June had been "progressive", accusing him of "over-egging it a bit".

"Maybe the tough measures on the deficit and also the effort to make the Budget fair would have come across more clearly if they hadn't been obscured in debate of claim and counter claim," he said. "I think there is something there to look at when making these remarks which do look to me more like the language of opposition than of government. Tell it as it is."

Mr Osborne insisted that the situation he inherited when the coalition Government took office was "incredibly serious".

"The largest bond investor in the world was saying that UK gilts were a no-go area, sitting on a bed of nitro glycerine," he said. "I have done everything I can to move Britain out of the financial danger zone."

He said that Britain was being spoke of in the same terms as Portugal, Italy, Greece and Spain which were facing sovereign debt crises.

He also denied that his Budget was not progressive.

"If you take them together I believe they are progressive and that the richest pay more than the poorest, not just in cash terms but as a proportion of their income," he said.