Mr Osborne accepted the views of the Office for Budget Responsibility that UK growth this year to 0.9 per cent (from an original forecast of around 2 per cent) but said recession should be avoided next year.

He told the House of Commons today: "Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debts.

We will do whatever it takes to protect Britain from this debt storm, while doing all we can to build the foundations of future growth."

He added: "Today we set out how we will do that:
• By demonstrating that this country has the will to live within its means and keep interest rates low;
• By acting to stimulate the supply of money and credit, to make sure those low interest rates are passed on to families and businesses;
• By matching our determination on the deficit with an active enterprise policy for business and with lasting investment in our infrastructure and education, so that Britain can pay its way in the future.

And at every opportunity helping families with the cost of living."

Mr Osborne said the "central forecast" from the independent Office for Budget Responsibility does not predict a recession here in Britain.

But he confirmed the OBR has revised down its short term growth prospects for the country, for Europe and for the world.

The OBR expects GDP in Britain to grow this year by 0.9% - and by 0.7% next year.

The OBR then forecast 2.1% growth in 2013 and 2.7% in 2014.

This would be followed by 3% in 2015 and 3% again in 2016.

The OBR assumes that the Euro area finds a solution to the current crisis.

Download the Chancellor's statement here http://bit.ly/ssCKKM #AS2011 #autumnstatement