CRITICS of Britain's economic recovery plan have been proved "comprehensively wrong", George Osborne has said.

The Chancellor conceded "many risks remain" for the UK, including the fall out from the crisis in Ukraine and the sluggish eurozone recovery, as he took to the world stage but hailed the success of the upturn a year after the International Monetary Fund (IMF) warned that his austerity policies were "playing with fire".

Mr Osborne was in ­Washington for the spring meetings of the IMF and World Bank, basking in the latest IMF forecasts which predict the UK will be the fastest-growing economy among the major developed nations this year.

Loading article content

In an upbeat address to the American Enterprise ­Institute he said: "Pessimistic predictions that fiscal consolidation was incompatible with economic recovery have been proved comprehensively wrong by events.

"Cutting deficits and controlling spending has not choked off recovery but has instead laid the foundations for sustainable growth.

"Many risks remain, but all this should be cause for cautious optimism."

He added: "The pessimists said our plan would not deliver economic growth. Now they say economic growth will not deliver higher living standards.

"They were wrong about the past and they are now wrong about the future.

"It's only by continuing to work through our long-term economic plan that we can deliver more economic security and a brighter future for all.

"If we can control our public finances, strengthen our financial systems and set free the power of human enterprise and innovation then there is no reason why our best days should not be ahead, for all of us."

He used the keynote speech to reject the ­arguments of the IMF's chief economist, Olivier Blanchard, who warned last year that the UK's austerity policies were strangling growth, saying such an approach was "precisely the wrong prescription for our economies".

The Chancellor said that the strengthening economy in Britain is underpinned by well-capitalised banks and a "credible" domestic fiscal policy.

He argued the UK's ­experience has shown that claims recovery required more fiscal stimulus and higher government borrowing were wrong, and that re-building the public finances goes hand-in-hand with restoring the wider economy.

Mr Osborne pointed to figures showing that job creation is three times faster than in any previous UK recovery - with four new jobs in the private sector for every one lost in the public sector.