Britain's Treasury chief warned Thursday that the global economy is facing its most dangerous time since the banking crisis of 2008, acknowledging that the recovery will be take longer _ and be harder _ than previously anticipated.
George Osborne told British lawmakers that growth will be hampered by a "huge overhang of debt."
"Markets are waking up to this fact and that is what makes this the most dangerous time for the global economy since 2008," he said. "I think we should be realistic about that. I think we should set our expectations accordingly."
Osborne sought to assure lawmakers that Britain is prepared to deal with any new crisis in the European banking sector and urged the eurozone to consider issuing bonds jointly to help sort out its debt crisis. Though Britain is not part of the eurozone, its economy is hugely dependent on what goes on there, not least through its banking system.
"Solutions such as eurobonds or other forms of guarantees now require serious consideration," Osborne said as part of remarks to legislators at an emergency session of the House of Commons called in response to rioting across England.
"And they must be matched by much more effective economic governance in the eurozone to ensure fiscal responsibility is hard wired into the system," he added.
Osborne defended his plan to cut 80 billion pounds ($130 billion) from government spending through 2015, which will see public sector jobs lost and welfare programs slashed.
Some politicians, including London mayor Boris Johnson _ a member of Osborne's Conservative Party _ question cuts to police numbers being made under the austerity package. The country's police inspection service has said the cuts will mean 16,000 fewer police officers by 2015.
Osborne's comments came in the wake of a warning from Bank of England governor Mervyn King that British economic growth will be only 1.4 percent this year, down from the previous forecast of 1.8 percent.
"There are a number of headwinds to world and domestic growth over the forecast period, not least the private and public debt overhang," King said. "And these headwinds are becoming stronger by the day."
In London, Britain FTSE 100 index of leading British shares was up 1.6 percent at 5,084 in late trading.