George Osborne issues warning over debt crisis

Mr Osborne said the Pre-Budget Report (PBR) published earlier this month by Chancellor Alistair Darling was "playing with economic fire" by failing to produce a credible plan to tackle the national debt.

In an article for the Daily Telegraph, Mr Osborne said only the election of a Conservative government would avert a crisis for Britain in the wake of Labour's alleged mismanagement of the economy.

He warned that investors were already demanding higher interest rates on the national debt.
"The people of Greece know what happens when the world loses confidence in your ability to pay your bills," he wrote.

"It's costing them an additional 2.5% on the interest rates they are paying to borrow."

If Britain follows Greece, he said, the interest bill on a £150,000 mortgage could go up by more than £200 a month.

His remarks come after Mr Darling revealed in the PBR that borrowing will hit £178 billion this year, higher than the £175 billion forecast in April's Budget.

The Chancellor has insisted that he would halve the deficit over the next four years in an "orderly way" which would not threaten the recovery.

Speaking in Delhi, Business Secretary Lord Mandelson said: "I have been speaking to dozens of business leaders in Bangalore and Delhi since arriving in India last Friday, explaining that Britain's economic recovery is firmly under way and promoting investment in the UK.

"By trashing Britain in this way, George Osborne is doing nothing but damage to this country.

"If all he has to say is so irresponsible, he would be better to keep his mouth shut."