Writing in today’s Financial Times, alongside Jeffrey Sachs of Columbia University, Osborne calls for early budget consolidation, followed by further measures over five years.
He says: “We believe delaying the start of deficit reduction would put long-term recovery at risk. Such an approach misjudges politics, financial markets and underlying economic realities.
“The general notion that delay is beneficial in the short term because it provokes more spending today, irrespective of future debt burdens, is wrong, in theory and in practice.
“If the starting position is a large structural deficit, further fiscal ‘stimulus’ can darken consumer and business confidence by creating fears about future debt burdens.”
Over the weekend Chancellor Alistair Darling repeated his assertion that cutting public spending too quickly could damage the economy and that the UK and world economies remain fragile.
Darling told the BBC: “If anyone imagines for a moment that we are all out of the woods yet, that is simply not the case.
“My judgement is that halving the deficit over a four-year period with the structural deficit coming down by two-thirds, is the right [course of action].”
Speaking at the LibDem spring conference in Birmingham over the weekend, Shadow Chancellor Vince Cable warned against cutting spending too quickly, whilst LibDem leader Nick CLegg suggested the Government was “in denial” about the need for cuts at some point.