Recovery will take longer says Chancellor

The Chancellor said that, although the coalition’s efforts to tackle the deficit had made the country a “safe haven” for investors, UK plc was not “immune” to the international “storm”.

As the FTSE dropped below the psychologically-important 5,000 mark again, he warned that the world faced its most dangerous moment since the credit crunch hit in 2008.

“History teaches us that recovery from this sort of debt-driven balance sheet recession was always going to be choppy and difficult. We warned that that would be the case,” Mr Osborne told the Commons.

“The whole world now realises that the huge overhang of debt means that the recovery will take longer and be harder than had been hoped.

“Markets are waking up to this fact and that is what makes this the most dangerous time for the global economy since 2008.

“I think we should be realistic about that. I think we should set our expectations accordingly.”