Speaking to a CBI Scotland dinner in Glasgow, the Chancellor – booed mercilessly just days ago at the Paralympics – stressed how the UK Government would:
l Stick with fiscal responsibility to show how Britain would deal with its debts and keep interest rates low.
l Maintain monetary activism to support demand and spread the benefits of low interest rates through the economy.
lPursue a far-reaching programme of supply-side reform to restore lost competitiveness and deliver real prosperity.
Despite the strong economic headwinds, Mr Osborne insisted his strategy was already delivering results.
"Our economy is healing," he declared. "Jobs are being created, manufacturing and exports have grown as a share of our economy, our trade with the emerging world is soaring, inflation is down, much of the necessary deleveraging in our banking system has been achieved and the world is once again investing in Britain."
However, he acknowledged the scale of the challenge was "so great that there are no quick fixes or easy routes to recovery".
As if to underline this, the Organisation for Economic Co-operation and Development (OECD), yesterday revised its forecast for Britain's growth in 2012 from +0.5% to -0.7%, the worst downgrade so far.
Its figures for other countries were also revised down: Germany 1.2% to 0.8%; US 2.4% to 2.3%; Canada 2.2% to 1.9%. Japan's forecast was revised upwards, from 2.0% to 2.2%.
Vince Cable, the Business Secretary, said the OECD downgrade was "not surprising" given the deep-rooted nature of the economic problems facing Britain.
"We're dealing with the consequences of a massive financial collapse, which left us with a legacy of a banking system that doesn't function properly and serious problems with many of our trading partners."
However, John Swinney, the Scottish Finance Secretary, said: "It simply beggars belief that Mr Osborne can claim the economy is 'healing' on the same day that the OECD has downgraded its forecasts and predicts the UK economy will shrink by 0.7% this year."
He said the OECD forecast reinforced the "urgent case for action to stimulate growth through additional capital spending".
Mr Swinney added: "The Chancellor can no longer ignore the evidence and he cannot simply blame the euro because euro area members Germany and Austria are growing.
"No-one in Scotland will believe a lecture from the Chancellor on the economy unless he provides immediate stimulus for growth."
Rachel Reeves, the Shadow Chief Secretary to the Treasury, said the OECD forecast was "very concerning" and showed just how badly the Coalition's economic policies had failed.
She noted how Britain's growth forecasts were slashed by more than any other major economy and that the UK was just one of two G20 countries in a double-dip recession.
"David Cameron and George Osborne need to stop clinging on to their failed economic plan and change course now. Without a serious plan for jobs and growth we won't get the deficit down and yet more long-term damage will be done," she added.
In a separate development, a group of leading economists claimed a change of economic policy was "desperately required" from the Coalition.
Four experts, including Professor David Blanchflower, an ex-member of the Bank of England's Monetary Policy Committee, and Professor Sir James Mirrlees, a Nobel Prize winner, called for increased capital investment to help stimulate economic growth.
In a letter to Scottish newspapers, the group stressed "the importance of having the courage to admit the need for change when it is so desperately required".
Meantime, Mario Draghi, President of the European Central Bank (ECB), unveiled details of a new bond-buying rescue plan aimed at easing the debt crisis in the eurozone.
He explained that the scheme would provide a "fully effective backstop" and it appeared to be the clearest sign yet that Mr Draghi is willing to live up to his pledge to do "whatever it takes" to save the single currency.
The ECB move cheered investors. European stock markets surged, with the FTSE-100 index rising nearly 2%, Germany's Dax up 2.6% and France's Cac-40 adding nearly 3%.
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