Osborne makes fresh case for austerity in warning over 'cocktail' of risks

Chancellor George Osborne has been defending his austerity policies this morning as he warns of a "dangerous cocktail" of risks facing the UK economy.

Speaking to the BBC ahead of a speech in Cardiff – and in the wake of recent numbers showing economic growth softening – the Chancellor said 2016 would be "mission critical" for eliminating the budget deficit. He cited risks from a slowdown in China, a slump in commodities such as oil and heightened geopolitical tension as evidence that the UK needed to shore up its national finances.

Striking a more sombre tone than at the Autumn Statement, when he softened cuts after a windfall from revised projections and reduced debt servicing costs, Osborne warned of "complacency" and the "old bad habits" creeping back into the national debate on the economy.

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"You have had people coming on programmes like this saying, 'We've got to spend billions of pounds here or billions of pounds there, the country can afford it.' All the old habits… that got Britain into that mess are re-emerging in some of our national debate and I need to remind people that it's a very challenging world out there; that Britain still has big economic problems that it has to fix."

His comments come as the World Bank also issued a warning over the global economy in a report that pointed to a "perfect storm" of worldwide economic problems that could emerge during 2016, The Guardian reports.

During the launch of its annual Global Economic Prospects report, the Bank said that five major economies – Brazil, Russia, India, China and South Africa – could all face problems at the same time, putting downward pressure on global growth figures.

The warning comes on the back of a slowdown in global growth to 2.4 per cent in 2015 and a major slump in China that has led to a "traumatic" start to the new year on global financial markets.